The price elasticity of demand for good $\mathrm{X}$ equals 0 .
Which of the following is most likely to be a characteristic of good X?
Choose 1 answer:
(A) There is ample time to find alternatives to good $X$.

B It has no substitutes and is a necessity.
(C) It is a luxury good.
(D) There are many firms selling a product almost identical to it.
(E) It makes up a large share of consumers' budgets.

Question

The price elasticity of demand for good $\mathrm{X}$ equals 0 .
Which of the following is most likely to be a characteristic of good X?
Choose 1 answer:
(A) There is ample time to find alternatives to good $X$.

B It has no substitutes and is a necessity.
(C) It is a luxury good.
(D) There are many firms selling a product almost identical to it.
(E) It makes up a large share of consumers' budgets.

Accepted Answer

∻Solution∻ ‖ a ⋮ Price Elasticity of Demand (PED): The PED measures how much the quantity demanded of a good responds to a change in the price of that good. It is calculated by the formula $PED = \frac{\% ext{ change in quantity demanded}}{\% ext{ change in price}}$. A PED of 0 means that the quantity demanded does not respond at all to a change in price. ‖ ‖ b ⋮ Characteristics of Goods with PED of 0: Goods with a PED of 0 are perfectly inelastic. This means that consumers will purchase the same amount regardless of the price. Such goods are typically necessities with no available substitutes. ‖ ∻Answer∻ ⚹ B. It has no substitutes and is a necessity. ⚹ ∻Key Concept∻ ⚹ Perfectly Inelastic Demand ⚹ ∻Explanation∻ ⚹ A good with a price elasticity of demand equal to 0 is perfectly inelastic, meaning quantity demanded remains constant despite changes in price, and it is usually a necessity without substitutes. ⚹◊What impact would a price elasticity of demand equal to 0 have on the market for good X in terms of consumer behavior and market dynamics?⍭ Generate me a similar question◊

Sia