The demand for a commodity does not change with the increase in its price from ₹ 5 to ₹ 10. What is its elasticity of demand?
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In this case,if the demand of the commodity does not change at all as its price increases.Then the price of elasticity of demand for the commodity will be 0 or the price elasticity of demand will be perfectly inelastic.
Explanation:
Price elasticity of demand denotes the percentage or proportionate change in the quantity demanded of any good or service due to a certain percentage change in its price.It is calculated by dividing the percentage change in quantity demanded by the percentage change in price of any commodity.In this case,the percentage or proportionate change in quantity demanded is 0 even if the price of concerned good or commodity increases from Rs.5 to Rs.10.Therefore,based on the formula of the price elasticity of demand,elasticity of demand of the concerned commodity will be automatically 0 as the percentage change in quantity of demand is also 0.The price elasticity of demand of the commodity is perfectly inelastic.
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