Question

Suppose the demand for cherries sold from roadside stands in Michigan is perfectly elastic. The owner of one roadside stand raises the price of cherries by 10%, as a result 1 point A. Zero cherries are sold at this stand. B. No change in the quantity demanded at this stand. C. A 10% decrease in the quantity demanded at this stand. D. A 10% increase in the quantity demanded at this stand. E. All available cherries will be sold.

Answer 1

A

Step-by-step explanation:

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price of the good.

Price elasticity of demand = percentage change in quantity demanded / percentage change in price

Infinitely elastic demand is perfectly elastic demand. Demand falls to zero when price increases

it is in perfectly competitive markets that demand is perfectly elastic