Question

What is the price elasticity of demand on the following demand curve?

Straight line parallel to Y-axis.

Answer 1

In this instance, regardless of changes in the commodity's price, the quantity demanded stays constant. The same amount is sought regardless of the price. This is an instance of demand that is perfectly inelastic. Perfectly or totally inelastic demand curves are those with zero elasticity. Fig. provides an illustration of this. Demand curve D1, a vertical straight line parallel to the Y-axis, is perfectly inelastic. Whether the price is OP or OP1, the quantity bought stays OQ. Even when it comes to basic requirements like food, there are relatively few instances of perfectly inelastic demand because price fluctuations can affect demand for these items. The demand for life-saving medications, on the other hand, is completely inelastic.