Q.Study the following figure and answer the question given below it.
Identify the price elasticity of demand from the following diagram:

A vertical demand curve parallel to the Y-axis = perfectly inelastic demand, so the answer is only a.

A demand curve parallel to the Y-axis is a vertical straight line: whatever the price, the quantity demanded stays exactly the same. This means the coefficient of price elasticity of demand is zero (Ed = 0) because there is no change in quantity in response to a change in price. That degree of elasticity is called perfectly inelastic demand (statement a).

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The economic term is Unitary (unit) elasticity of demand, where Ed = 1.

Price elasticity of demand is measured as Ed = percentage change in quantity demanded / percentage change in price. When a given percentage change in price brings about an exactly equal percentage change in quantity demanded, this ratio equals one. This case is called unitary elastic demand. Its notable feature is that the total expenditure (total outlay) on t …

Completing the correlation: Perfectly inelastic demand : Ed = 0 :: Perfectly elastic demand : Ed = infinity. Answer: Perfectly inelastic demand.

Why: The degrees of price elasticity of demand are:

• Perfectly elastic demand (Ed = infinity) — an infinitely large change in quantity for a negligible change in price; the demand curve is a horizontal line.
• Perfectly inelastic demand (Ed = 0) — quantity demanded stays exactly the same whatever the price; the demand curve is a vertical line. …

The term described is Price Elasticity of Demand — the responsiveness of the quantity demanded of a good to a change in its price.

Price elasticity of demand shows how much the quantity demanded changes when the price of the good changes. It is measured as the ratio of the percentage change in quantity demanded to the percentage change in price, i.e. Ed = %ΔQ / %ΔP. If demand responds sharply to a price change, demand is elastic; if it barely responds, demand is inelastic …

The missing term is Unitary elastic demand, the degree of elasticity where the coefficient Ed = 1.

Price elasticity of demand measures how responsive quantity demanded is to a price change, and its coefficient defines five degrees:

The correct option is Steeper. When the percentage change in quantity demanded is less than the percentage change in price, demand is relatively inelastic (Ed less than 1) and its curve is comparatively steep.

The slope of the demand curve reflects the degree of elasticity:

Read the slope: vertical = perfectly inelastic, horizontal = perfectly elastic, steep = relatively inelastic, flat/rectangular-hyperbola = relatively/unitary elastic. For a vertical curve the answer is perfectly inelastic demand.

Each diagram in this section shows one degree of price elasticity of demand, identified from the shape of the demand curve:

• Perfectly inelastic demand (Ed = 0): the demand curve is a vertical straight line — quantity stays the same whatever the price.
• Perfectly elastic demand (Ed = infinity): the demand curve is a horizontal straight line — at one price buyers take any quantity.
• Relatively inelastic demand (Ed less than 1): the curve is steep — a large price change causes only a small change in quantity. …

A horizontal demand curve = perfectly elastic demand (Ed = infinity). Match the diagram's slope to identify the degree.

The four degrees identified from a demand-curve diagram are:

• Perfectly elastic demand (Ed = infinity): a horizontal straight line — the whole quantity is bought at one price, and demand vanishes if price rises.
• Perfectly inelastic demand (Ed = 0): a vertical straight line — quantity is fixed regardless of price.
• Relatively inelastic demand (Ed less than 1): a steep curve — quantity changes little when price changes. …

A steep downward-sloping demand curve = relatively inelastic demand (Ed less than 1). Identify the degree from the curve's slope.

Degrees of price elasticity read from the diagram:

• Relatively inelastic demand (Ed less than 1): a steep curve — quantity demanded changes proportionately less than price (necessities behave this way).
• Relatively elastic / unitary demand (Ed of 1 or more): a flatter curve — quantity changes proportionately as much as or more than price.
• Perfectly inelastic demand (Ed = 0): a vertical line. …

A flatter curve = relatively elastic demand (Ed greater than 1); a rectangular hyperbola = unitary elastic (Ed = 1). Match the diagram's shape to read the degree.

Degrees of price elasticity identified from the diagram:

• Relatively elastic demand (Ed greater than 1): a flatter curve — a small price change causes a larger change in quantity demanded (luxuries behave this way).
• Unitary elastic demand (Ed = 1): a rectangular hyperbola — quantity demanded changes exactly in proportion to the price change. …