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Question
Distinguish between perfectly elastic demand and perfectly inelastic demand.
Distinguish Between
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Solution
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Perfectly elastic demand
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Perfectly inelastic demand
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| When a slight or zero change in the price brings about an infinite change in the quantity demanded of that commodity, it is called perfectly elastic demand. | When a percentage change in price has no effect on the quantity demanded of a commodity, it is called perfectly inelastic demand. |
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It implies that the demand is infinitely responsive to any change in the price of the good.
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It implies that the demand is completely unresponsive to any change in the price of the good.
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| It is represented symbolically as: Ed = `(% ∆"Q")/(%∆"P")` = ∞ | It is represented symbolically as: Ed = `(% ∆"Q")/(%∆"P")` = 0 |
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For example, a 10% fall in price may lead to an infinite rise in demand.
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For example, a 20% fall in price will have no effect on the quantity demanded.
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