If the demand curve is parallel to the x-axis, then elasticity of demand is
Show Hint
- infinite
- one
- less than one
- more than one
The Correct Option is A
Solution and Explanation
Step 1: Understanding the Concept:
A demand curve parallel to the x-axis is a horizontal line. This indicates that consumers are willing to buy an unlimited quantity of a good at a specific price, but if the price increases even slightly, the quantity demanded drops to zero.
Step 2: Detailed Explanation:
This situation represents perfectly elastic demand. The formula for price elasticity of demand (\(E_d\)) is the percentage change in quantity demanded divided by the percentage change in price. For a horizontal demand curve, a tiny (near-zero) percentage change in price leads to an infinitely large percentage change in quantity demanded. Mathematically, any number divided by zero is infinite. Therefore, the elasticity of demand is infinite.
Step 3: Final Answer:
If the demand curve is parallel to the x-axis, the elasticity of demand is infinite. Therefore, option (A) is correct.
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