Question

consider the figure to the right. use the basic definition of the price elasticity of demand to explain why the value of the price elasticity of demand is zero for the extremely rare situation of a vertical demand curve. the price elasticity of demand is defined as the percentage change in dropdown divided by the percentage change in dropdown. since the change in quantity demanded is dropdown for any price change along a vertical demand curve, both the percentage change in quantity demanded and the price elasticity of demand are dropdown. options for last dropdown: infinite, zero, constant

Explanation:

1. The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.
2. For a vertical demand curve, the quantity demanded does not change at all (change in quantity demanded is zero) regardless of price changes.
3. If the numerator (percentage change in quantity demanded) is zero, then the whole elasticity (which is percentage change in quantity demanded divided by percentage change in price) will also be zero.

For the first dropdown (percentage change in): quantity demanded
For the second dropdown (divided by percentage change in): price
For the third dropdown (change in quantity demanded is): zero
For the fourth dropdown (price elasticity of demand are): zero

Answer:

First dropdown: quantity demanded
Second dropdown: price
Third dropdown: zero
Fourth dropdown: zero