Question

True or False with Reason:

When quantity demanded of a commodity does not change with change in price, then coefficient of price elasticity of demand is zero.

Answer 1

This statement is true.

Explanation:

This is a case of perfectly inelastic demand, where quantity demanded remains constant even when price changes.

Percentage change in quantity demanded is zero, so price elasticity = 0 ÷ percentage change in price = 0. Therefore, the coefficient of price elasticity of demand is zero.