Question

Distinguish between Perfectly elastic demand and Perfectly inelastic demand.

Hint:

Perfectly elastic demand implies consumers will only buy at one price, while perfectly inelastic demand means consumers will buy the same quantity regardless of price.

Answer 1

Perfectly Elastic Demand refers to a situation where the demand for a good is extremely sensitive to price changes. A small change in price leads to an infinite change in the quantity demanded. The demand curve is horizontal, indicating that consumers are willing to buy any quantity at a given price.
Perfectly Inelastic Demand refers to a situation where the demand for a good is completely unresponsive to price changes. No matter how much the price changes, the quantity demanded remains constant. The demand curve is vertical. Final Answer: \[ \boxed{Perfectly \; Elastic \; Demand \; shows \; infinite \; response \; to \; price \; changes, \; while \; Perfectly \; Inelastic \; Demand \; shows \; no \; response.} \]