GENERAL KNOWLEDGE

Detailed explanation-1: -The value of elasticity of demand ranges from zero to infinity. Q. Q. When the slope of demand curve = infinity, the price elasticity of demand = 0.

Detailed explanation-2: -A product with an elasticity of 0 would be considered perfectly inelastic, because price changes have no impact on demand. Many household items or bare necessities have very low price elasticity of demand, because people need these items regardless of price. Gasoline is an excellent example.

Detailed explanation-3: -The price elasticity of demand (PED) measures the percentage change in quantity demanded by consumers as a result of a percentage change in price. It is calculated by dividing the “% change in quantity demanded” by the “% change in price, ‘’ represented in the PED formula.

Detailed explanation-4: -When demand is perfectly elastic (or elasticity of demand is infinity), equilibrium price remains unchanged with increase or decrease in supply. Because (being perfectly elastic) demand increases or decreases proportionate to the increase or decrease in supply.