Question

If the demand for Hilsa shad remains same irrespective of change in the price, the price elasticity of demand in such situation is said to be
[Question ID = 1436]

• A. Unit elastic
• B. Perfectly elastic
• C. Perfectly inelastic
• D. Inelastic

Hint:

Remember: Inelastic looks like an I (Vertical line). Elastic looks like an E (without the vertical stem $\rightarrow$ Horizontal line). If quantity is "Fixed," elasticity is zero.

Answer 1

The Correct Option is C

Step 1: Understanding the Question:
The question asks about the degree of responsiveness of quantity demanded to a change in price when the quantity demanded does not change at all.
Key Formula or Approach:
Price Elasticity of Demand ($E_p$) = $\frac{\% \text{ change in Quantity Demanded}}{\% \text{ change in Price}}$.

Step 2: Detailed Explanation:

• Scenario: The question states demand "remains same irrespective of change in the price." This means the percentage change in quantity is $0$.

• Calculation:
\[ E_p = \frac{0}{\% \Delta P} = 0 \]

• Classification: When $E_p = 0$, it is called Perfectly Inelastic demand. The demand curve for such a product is a vertical straight line.

• Context: While no real-world fish has perfectly inelastic demand over all price ranges, Hilsa is often considered highly inelastic in West Bengal and Bangladesh because consumers view it as a cultural necessity and will buy a minimum amount regardless of high prices.

• Other Options:
- Unit elastic: $E_p = 1$.
- Perfectly elastic: $E_p = \infty$. Demand is a horizontal line.
- Inelastic: $0 < E_p < 1$.

Step 3: Final Answer:
The demand is perfectly inelastic.