Q3Managerial Economics & Financial Accounting
Question
2 marks
Draw graph to show a) Perfectly Inelastic Demand b) Perfectly elastic demand (1 + 1=2)
Answer
Perfectly inelastic demand is a vertical line; perfectly elastic is a horizontal line.
- Perfectly Inelastic Demand: A vertical line parallel to the Y-axis (Quantity demanded is constant regardless of price). - Perfectly Elastic Demand: A horizontal line parallel to the X-axis (Infinite demand at a specific price).