Question : Assertion: The price elasticity of demand for a perfectly elastic demand curve is infinity.
Reason: A perfectly elastic demand curve is horizontal, indicating that quantity demanded becomes infinite at a specific price.
Option 1: Both the assertion and reason are correct and related.
Option 2: Both the assertion and reason are correct but not related.
Option 3: The assertion is correct, but the reason is incorrect.
Option 4: The assertion is incorrect, but the reason is correct.
Correct Answer: Both the assertion and reason are correct and related.
Solution : The correct answer is (A) Both the assertion and reason are correct and related.
The assertion states that the price elasticity of demand for a perfectly elastic demand curve is infinity. This is correct. Perfectly elastic demand means that any change in price will result in an infinite change in quantity demanded. In other words, consumers are extremely responsive to price changes, and a small change in price will cause a proportionally infinite change in quantity demanded.
The reason states that a perfectly elastic demand curve is horizontal, indicating that quantity demanded becomes infinite at a specific price. This is also correct. A horizontal demand curve represents perfect elasticity because any increase or decrease in price will result in an infinite change in quantity demanded. At a specific price, consumers are willing to buy any quantity demanded, making the quantity demanded infinite.
Therefore, both the assertion and reason are correct and related.