Why is the perfectly elastic demand curve parallel to OX-axis?
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Explanation:
The formula for elastic demand is the percentage change in quantity demanded divided by the percentage change in price. Elastic demand is when the percentage change in the quantity demanded exceeds the percentage change in price.
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Perfectly elastic demand means that consumers are extremely responsive to changes in price. If a seller increased price even a little bit, consumers will shift to buying the same product from a different producer or shift to its substitutes. A product with perfectly elastic demand has perfect substitutes. Thus, the producer has no choice but to charge the same price regardless of the demand. That is why, the curve is parallel to X-axis.
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