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If the price of a good changes and demand does not change at all, the price elasticity of demand is:
AInfinity — perfectly elastic
BEqual to one — unitary
CZero — perfectly inelastic
DNegative — relatively inelastic
Answer & Solution
Correct answer: C. Zero — perfectly inelastic
1. When demand is constant despite price changes, the proportionate ΔQ is zero.
2. Hence Ep = 0 / (proportionate ΔP) = 0.
3. This is termed perfectly inelastic demand; the demand curve is parallel to the OY-axis. Salt and life-saving drugs are listed examples.
_Source: ICMAI BoS CMA Foundation Paper 4 (Business Economics & Management), Module 1 §1.3 (Theory of Demand) + §Elasticity of Demand, p. 33-46_
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