Question

If the price decreases from Rs 10 to Rs 8 of a commodity, but the quantity demanded remains the same, price elasticity is:

a) One

b) Zero

c) [infinity]

d) None of these

Answer 1

The price elasticity is zero when the quantity demanded of a commodity remains constant despite a change in price.

Step-by-step explanation:

If the price decreases from Rs 10 to Rs 8 of a commodity but the quantity demanded remains the same, the price elasticity is zero. Price elasticity measures how the quantity demanded or supplied of a good responds to a change in its price. The polar cases of elasticity include infinite (perfect) elasticity and zero elasticity. Infinite elasticity implies a significant change in quantity for any price change, whereas zero elasticity means quantity does not change regardless of how much the price changes. When there is no change in quantity despite a price decrease, it indicates that the demand is perfectly inelastic, as shown by a vertical demand curve, and elasticity is effectively zero.