When analyzing a graph with different demand curves, which curve represents perfectly elastic demand?

• A. A demand curve that is steeper than the supply curve
• B. A horizontal demand curve
• C. A vertical demand curve
• D. A downward-sloping demand curve with a constant slope

Answer: (B)

Verified step by step guidance

1. Understand the concept of elasticity in demand: Elasticity measures how much the quantity demanded responds to a change in price.
2. Recall that perfectly elastic demand means consumers will only buy at one price, and any change in price causes quantity demanded to drop to zero or become infinite.
3. Visualize the demand curve: A perfectly elastic demand curve is horizontal because the price remains constant regardless of quantity demanded.
4. Compare this with other demand curves: A vertical demand curve represents perfectly inelastic demand, while downward-sloping curves represent varying elasticities but not perfect elasticity.
5. Conclude that the horizontal demand curve represents perfectly elastic demand because it shows infinite responsiveness to price changes at a fixed price level.