Question

Identify and explain the following concept.

Ramesh's demand for salt remained unchanged lnspite of a 10% rise in its price.

Answer 1

Concept: Perfectly Inelastic demand.

Explanation:

• Perfectly inelastic demand (Ed = 0) occurs when a percentage price adjustment has no impact on the quantity demanded of a good.
• A 10% price increase will therefore have no impact on the quantity needed.
• In reality, such an occurrence is uncommon. An illustration. milk and salt are in demand.