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How is the price elasticity of demand related to a vertical straight line demand curve?
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How is the price elasticity of demand related to a vertical straight l...
¶ Perfectly inelastic demand is graphed as a vertical line and indicates a price elasticity of zero at every point of the curve. This means that the same quantity will be demanded regardless of the price. Elasticity along a straight line demand curve varies from zero at the quantity axis to infinity at the price axis.¶
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How is the price elasticity of demand related to a vertical straight l...
Price Elasticity of Demand and Vertical Straight Line Demand Curve
The price elasticity of demand measures the responsiveness of the quantity demanded of a product to a change in its price. It is the ratio of the percentage change in quantity demanded to the percentage change in the price of the product.
Vertical Straight Line Demand Curve
A vertical straight line demand curve is a special case where the quantity demanded is constant at all prices. This means that the price elasticity of demand for such a curve is zero because there is no change in the quantity demanded with a change in price.
Relationship between Price Elasticity of Demand and Vertical Straight Line Demand Curve
The price elasticity of demand and the vertical straight line demand curve are related in the following ways:
- Price Elasticity of Demand is Zero: As mentioned earlier, the price elasticity of demand for a vertical straight line demand curve is zero. This means that the change in price has no effect on the quantity demanded.
- Perfectly Inelastic Demand: A vertical straight line demand curve represents a perfectly inelastic demand because the quantity demanded remains constant regardless of the price.
- Price Changes: Since the quantity demanded does not change with a change in price in a vertical straight line demand curve, the revenue earned by the seller also remains constant. This is because the change in price is not affecting the quantity demanded.
- Unique Situation: A vertical straight line demand curve is a unique situation that is not commonly observed in the real world. This is because in most cases, a change in price will result in a change in quantity demanded.
Conclusion
In conclusion, the price elasticity of demand and the vertical straight line demand curve are related in that the price elasticity of demand for a vertical straight line demand curve is zero, representing a perfectly inelastic demand curve. While this is a unique situation that is not commonly observed in the real world, it is an important concept to understand in economics.
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How is the price elasticity of demand related to a vertical straight line demand curve?
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How is the price elasticity of demand related to a vertical straight line demand curve? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about How is the price elasticity of demand related to a vertical straight line demand curve? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How is the price elasticity of demand related to a vertical straight line demand curve?.
How is the price elasticity of demand related to a vertical straight line demand curve? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about How is the price elasticity of demand related to a vertical straight line demand curve? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for How is the price elasticity of demand related to a vertical straight line demand curve?.
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