When demand is perfectly elastic, then consumer surplus is
A)infinite.
B)zero.
C)1.00.
D)-1.00.
E)between zero and 1.00.

Question

Quizplus · Accepted Answer

When demand is perfectly elastic, it means that consumers are very sensitive to changes in price and will only buy the good if it is offered at a very low price. As a result, the price is determined by the demand curve and any increase in price will cause the demand to drop to zero. Therefore, the consumer surplus will be zero as consumers are only willing to pay the exact price for the good and no more.

When Demand Is Perfectly Elastic, Then Consumer Surplus Is