Refer to the graphs above. Which one shows a perfectly elastic demand?

• A. A horizontal demand curve
• B. A vertical demand curve
• C. A downward-sloping demand curve
• D. A demand curve with a constant positive slope

Answer: (A)

Verified step by step guidance

1. Understand the concept of price elasticity of demand, which measures how much the quantity demanded responds to a change in price.
2. Recall that a perfectly elastic demand means consumers will only buy at one price, and any slight increase in price causes quantity demanded to drop to zero.
3. Recognize that a perfectly elastic demand curve is represented graphically as a horizontal line, indicating that price remains constant regardless of quantity demanded.
4. Compare the options: a horizontal demand curve shows perfect elasticity, a vertical curve shows perfect inelasticity, a downward-sloping curve shows typical negative elasticity, and a curve with a positive slope is unusual for demand.
5. Conclude that the graph showing a horizontal demand curve corresponds to perfectly elastic demand.