Question

What would be the shape of a demand curve of a commodity when its price elasticity of demand is zero?

Answer 1

When the price elasticity of demand for a commodity is 0, it means that demand for that commodity is completely inelastic. This means that any change in the commodity's price has no effect on the quantity needed.

Shape of the Demand Curve for Perfectly Inelastic Demand: In this case, the demand curve is a vertical line that runs parallel to the Y-axis. This is because demand remains consistent regardless of price.

Characteristics of a Perfectly Inelastic Demand Curve:

1. No Responsiveness: Consumers do not reduce or increase the quantity demanded, even if the price varies dramatically.
2. Essential Goods: This frequently refers to things that are necessary yet have no close substitutes, such as life-saving drugs or important medical services.
3. Fixed Quantity: The quantity demanded is fixed since the good is considered necessary, regardless of price.