Question

Observe the following figure and answer the questions given lowing below it:

Identify and explain the degree of elasticity of demand in the figure.

Answer 1

Degree of Elasticity: Perfectly Elastic Demand

Explanation:

The demand curve in the figure is a vertical straight line (parallel to the Y-axis).
This shows that quantity demanded remains the same regardless of changes in price.
Hence, the price elasticity of demand is zero (Ed = 0), which is called perfectly inelastic demand.