Price Elasticity of Demand for the Two Goods X and Y Are Zero and (–) 1 Respectively. Which of the Two is More Elastic and Why? - Economics

Price elasticity of demand for the two goods X and Y are zero and (–) 1 respectively. Which of the two is more elastic and why?

Solution

When the price elasticity of demand for Good Y and Good X are zero and −1, respectively, the elasticity of demand is less than unity, i.e. Ed < 1. It is a situation of inelastic demand. Here, the demand of Good Y is perfectly elastic compared to Good X. When the price elasticity of demand for Good Y is zero, it implies that Good Y is perfectly inelastic compared to Good X.

Concept: Elasticity of Demand
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