Question

3. Define price elasticity of demand for a commodity. What would be the shape of a demand curve of
a commodity when its price elasticity of demand is:
(i) zero?
(ii) infinite?
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Answer 1

Answer:

First,if the price elasticity of demand of any commodity is zero,it means that the consumer demand of that commodity is perfectly inelastic and the consumers or buyers in this case,are completely unresponsive to insensitive to any change in the commodity price in the market.Therefore,the demand curve of the commodity will be a flat vertical straight line.

On the other hand,if the price elasticity of demand of any commodity is infinity,it implies that the demand elasticity of the commodity is perfectly elastic and the consumers are highly sensitive or responsive towards even the slightest possible change in the commodity price in the market.Hence,in this case,the demand curve of the commodity would be a flat horizontal straight line showing infinite percentage or proportion of change in quantity demanded of consumers or buyers in response to even the slightest change in its price.