Question
Economics Question on Demand analysis
When the price of a good falls from Rs 30 to Rs 25, the consumer continues to purchase the same quantity of the good. What will be the price elasticity of demand for this good?
A
Unitary elastic
B
Perfectly elastic
C
Perfectly inelastic
D
Elastic
Answer
Perfectly inelastic
Explanation
Solution
Price elasticity of demand measures how much the quantity demanded changes in response to a price change. If the quantity demanded remains constant despite a change in price, the demand is perfectly inelastic.