(a) What is price elasticity of demand?
(b) With carefully labeled diagrams, illustrate each of the following:
(i) perfectly inelastic demand
(ii) unitary elastic demand
(iii) fairly elastic demand
(iv) perfectly elastic demand.
(a) Price elasticity of demand is the degree of responsiveness of quantity demanded to a small change in the price of the commodity. It is the ratio of the percentage change in quantity demanded to the percentage change in price.
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