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Q.17

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Economics Today
Found in: Page 435

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Short Answer

Consider panel (a) of Figure 19-1. Use the basic definition of the price elasticity of demand to explain why the value of the price elasticity of demand is zero for the extremely rare situation of the vertical demand curve.

The value of the price elasticity of demand is zero for the extremely rare situation of the vertical demand curve as value versatility of interest as the proportion of rate change in the amount requested to the rate change in cost.

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Step by Step Solution

Step 1: Given Information

Price elasticity of demand estimates how much the interest for the ware changes with one unit change in the cost of the item.

Step 2: Explanation

Price elasticity of interest is zero infers that there is for all intents and purposes no effect of the cost change on the interest of the item. It is an entirely inelastic interest bend. Presently in the event that there is no adjustment of interest with an adjustment of value, the numerator (for example rate change in the amount requested) becomes zero. So anything, assuming that isolated by nothing, stays zero. Along with these lines, value flexibility is zero for vertical interest bend.

It occurs for exceptionally intriguing products. For instance, we can consider life-saving medications. For such meds, assuming it is required, we never ponder the cost. So regardless of whether cost increments, the request stays unaffected.

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