A consumer is willing and able to buy 1,000 units of a good at $10, but the consumer's quantity demanded falls to zero if the price rises even a fraction of a cent. The consumer's demand curve is
A) horizontal and is perfectly inelastic.
B) horizontal and is perfectly elastic.
C) vertical and is perfectly elastic.
D) downward sloping from higher prices down to $10 and then horizontal.

Question

Quizplus · Accepted Answer

The fact that the consumer is willing to buy 1,000 units at $10 but is unwilling to buy any at a slightly higher price indicates that the demand curve is perfectly elastic at a price of $10. This means that the consumer is highly price sensitive and will not purchase the good at a higher price. A perfectly elastic demand curve is represented as a horizontal line.

A Consumer Is Willing and Able to Buy 1,000 Units