Question : The price elasticity of demand for a good is perfectly inelastic if it is:
Option 1: -1
Option 2: 0
Option 3: 1
Option 4: Infinity.
Answer (1)
19th Jan, 2024
Correct Answer: 0
Solution : The correct answer is (b) 0.
When the price elasticity of demand for a good is 0, it means the demand is perfectly inelastic. Perfectly inelastic demand indicates that the quantity demanded does not respond to changes in price. No matter how much the price changes, the quantity demanded remains the same.
In this case, the value of the price elasticity of demand is 0, indicating that a change in price does not result in any change in the quantity demanded. The demand curve is vertical, showing that consumers are completely insensitive to price changes.
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