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In: Economics

3. If the quantity of a good demanded remains unchanged as its price changes, the coefficient...

3. If the quantity of a good demanded remains unchanged as its price changes, the coefficient of price elasticity of demand is ( a ) greater than 1, (b ) equal to 1, ( c) smaller than 1 or (d) zero.

Solutions

Expert Solution

If the quality of goods demanded remains unchanged as it's price changes, the coefficient of price elasticity of demand remains ZERO.

The demand curve will be a vertical line parallel to Y axis.

For example if the Price of Commodity A increased from $20 per unit to $25 per unit but it's quantity demanded remains same at 50 units per month with no change whatsoever.

%change in quantity demanded is 0%

% change in price is 25%

(0%)/(25%)=0

So elasticity will be zero in the given problem.

Rahul Sunny answered 2 years ago
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