Zero price elasticity of demand means

Q. Zero price elasticity of demand means

1. Whatever the change in price, there is absolutely no change in demand
2. for a small change in price, there is a small change in demand
3. for a small change in price, there is a large change in demand
4. for a large change in price, there is a small change in demand

Answer: whatever the change in price, there is absolutely no change in demand.

Price Elasticity of Demand

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In economics, the price elasticity of demand (PED or E_d) is a measure to show the responsiveness (or elasticity) of the quantity demanded for a good or service to a change in its price, ceteris paribus. It is also known as the percentage change in quantity demanded for a good or service for a percentage change in the price of the same good or service. In short, the price elasticity of demand is given by the following formula:

$${\displaystyle Price\ elasticity\ of\ demand={\frac {Percentage\ change\ in\ quantity\ demanded}{Percentage\ change\ in\ price}}}$$

As the price and the quantity demanded of a good are inversely related (i.e. an increase in price will always cause a decrease in quantity demanded and vice versa), the sign of PED is always negative. Hence, economists tend to just ignore the sign and compare the absolute values instead.

The price elasticity of demand (PED) measures the change in demand for a good in response to a change in price.

Price elasticity equals to zero, it means that, when price increases, supplies quantities do not increase or decrease. They simply don't react to price. The demand curve will be vertical.

If elasticity is greater than 1, indicating a high responsiveness to changes in price. Computed elasticities that are less than 1 indicate low responsiveness to price changes and are described as inelastic demand.

If the co-efficient of price elasticity of demand = zero, demand is perfectly inelastic i.e. demand does not vaty with a change in price.