3 years ago

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

Business

1 answer:

Julli [10]3 years ago

4 0

Answer:

Demand drops to zero

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.

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