Question

A 4 percent reduction in the price of a product has zero effect on the dollar amount of consumer expenditure on the product. The price elasticity of demand is

Answer 1

The price elasticity of demand is zero, indicating perfect inelasticity.

Step-by-step explanation:

The price elasticity of demand defines the relationship between the percentage change in price and the corresponding percentage change in quantity demanded. When a 4 percent reduction in price has zero effect on the dollar amount of consumer expenditure, it indicates zero elasticity (also referred to as perfect inelasticity). In this case, the demand for the product is completely unresponsive to price changes.

Answer 2

Perfectly inelastic

Step-by-step explanation:

In the case where there is a reduction in a price that does not impact the demand done by the consumers so the elasticity of demand with respect to the price would be zero i.e. perfectly inelastic demand

As in the given case there is 4 percent decreased in the price of the product that has no impact on the consumption spenditure so the price elasticity of demand is zero

hence, the same is to be considered