Answer to Question #249502 in Microeconomics for cris

Question

how to calculate the price elasticity of demand if the price is at 0

Answer 1

Demand elasticity$=(dQ/dP)×P/Q$

Therefore, setting price to be zero

Demand elasticity $=(dQ/dP)×0/Q =(dQ/dP)×0 =0$

This means that the elasticity will be at 0 and it is said to be a perfectly inelastic. This tells that demand will remain unchanged at any price.