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A demand curve that is a vertical straight line, where quantity demanded does not change at all when price changes, represents which type of elasticity?
APerfectly elastic (Ep = infinity)
BPerfectly inelastic (Ep = 0)
CUnit elastic (Ep = 1)
DRelatively elastic (Ep > 1)
Answer & Solution
Correct answer: B. Perfectly inelastic (Ep = 0)
1. If quantity demanded does not respond at all to a price change, elasticity is zero.
2. This is shown by a vertical demand curve.
3. A horizontal curve would mean perfectly elastic (infinity), not vertical.
4. A vertical demand curve therefore represents perfectly inelastic demand, Ep = 0.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 2 Unit I "Law of Demand and Elasticity of Demand", p.23_
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