Define perfectly
Demand refers to the situation when the consumers have a willingness to pay along with the required resources that is the money in order to purchase the desired commodity. The elasticity of demand refers to the responsiveness or the effects of a change in the prices, income and other factors on the quantity demanded of the commodities.
Perfectly inelastic demand refers to the situation when the demand remains fixed at every change in the level of prices. The price elasticity of demand, in this case, will be equal to zero and the curve will be a vertical line parallel to the y-axis fixed at a certain quantity only along with the difference in prices. The graph can be seen as:-
The quantity demanded is fixed at Q while the initial prices are P0. When the Prices decrease from P0 to P1, the quantity demanded remains the same and the equilibrium changes from E to E1 while when the prices increase from P0 to P2, the equilibrium shifts from E to E2 but the quantity demanded remains the same.
Step by step
Solved in 3 steps with 1 images
