BUSINESS ADMINISTRATION
BUSINESS ENVIRONMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Relatively Elastic Demand
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Unitary Elastic Demand
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Perfectly Inelastic Demand
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Perfectly Elastic Demand
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Detailed explanation-1: -Under the perfectly inelastic demand, irrespective of any rise or fall in price of a commodity, the quantity demanded remains the same. The elasticity of demand in this case will be equal to zero (ed = 0).
Detailed explanation-2: -When the demand of a quantity does not change as a result of a change in the price of a commodity, the demand of that commodity is called a perfectly inelastic demand. In this case, the elasticity of demand is zero.
Detailed explanation-3: -A perfectly inelastic good would be one where demand does not change regardless of the price; however, no such good or service is perfectly inelastic. Inelastic stands in contrast to elastic, where the latter witnesses significant changes in demand when the price changes.
Detailed explanation-4: -The correct option is D. Extension of demand. When the price of the commodity falls, its demand expands which is technically termed as the extension of demand.
Detailed explanation-5: -Perfectly inelastic demand means that prices or quantities are fixed and are not affected by the other variable. Unitary demand occurs when a change in price causes a perfectly proportionate change in quantity demanded.