1)What are some real-world examples of perfectly elastic demand ?

2)Why does dividing the percentage change in quantity demanded by the percentage change in price show how elastic a market is?

3)What effect might the increasing availability of lithium over time have on the own-price elasticity of demand for oil?

4)Why can't the slope of the demand curve be used to measure the responsiveness of quantity to a change in price?

1)1) hot dogs from hot dog vendors in a city - though there are location advantages, hot dogs all pretty much taste the same and with dozens of vendors located close to one another, if one tries to increase the price of a hot dog, they will likely lose most of their business to the others.

2) milk - most people don't pay attention to what farm their milk comes from. If two gallons of 2% milk from separate farms sat side by side and one decided to raise their price, people would likely buy the cheaper one.

2)Dividing the percentage change in quantity demanded by the percentage change in price tells us how quantity demanded when the price changes. If the price increases by 10% and the quantity demanded decreases by 5% then the elasticity is 0.5 and demand is inelastic. Quantity changes less than the price change.

If the price increases by 10% and the quantity demanded decreases by 20% then the elasticity is 2 and the demand is elastic. Quantity changes more than the price change.

3)Lithium is a metal which is used in batteries. It is a substitute good for oil as the cars which have been running on oil are now being run on batteries.

So when the availability of lithium increases, the price elasticity of demand also increases. With an increase in the price of oil, the consumers will reduce their demand for oil as the substitute of oil is now available in the market. The price elasticity of demand for oil, hence, has a positive relationship with the availability of lithium.

4)The elasticity and slope are two different concepts. The elasticity is used to measure the responsiveness of quantity demanded to a change in price, whereas the slope is used to measure the steepness on a curve and any line.

In economics, the demand curve slope represents the change in price as the quantity demanded changes, whereas elasticity represents a proportionate change in quantity demanded to a proportionate change in price.