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What is the effect of a 10 percent price increase on quantity demanded if elasticity is infinite?

User Vqf
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Answer:

Demand drops to zero

Step-by-step explanation:

Infinite elasticity of demand is also called perfect elasticity of demand.

In this scenario the demand for a product is attached to it's price.

There is an infinite change in the quantity demanded as a result of change in price.

Graphically it is a horizontal demand curve as represented in the attached

Even a small increase in price will cause demand to fall to zero.

Examples are luxury goods such as high end cars and expensive jewelry.

What is the effect of a 10 percent price increase on quantity demanded if elasticity-example-1
User Aaron Douglas
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