Question

Jenna runs a small boutique in Capitola. She tells one of her suppliers that she is willing to pay $6for a pair of wool hand warmers and not a dime more. On the basis of this information, what canyou conclude about her price elasticity of demand for wool hand warmers? (Assume that Jenna istelling the truth.)

A) It is perfectly elastic.
B) The price elasticity coefficient is 0.
C) It is perfectly inelastic.
D) It is elastic.

Answer 1

A) It is perfectly elastic.

Step-by-step explanation:

Perfectly elastic: The term "perfectly elastic" is described as a demand curve that is being represented through a straight "horizontal line" and displays that the market demand related to a specific product is being directly tied or attached to the price. However, the given demand is considered as infinite at a particular price. Therefore, any change in the specific price will lead to eliminating all the demands of the given product.

In the question above, the given statement signifies the "it is perfectly elastic".