Question

Price elasticity of demand for the good X and Y are zero and -1 respectively. Which of the two is more elastic and why?

Answer 1

Hint – A product is termed as elastic if and only if the quantity of the good purchased changes more than the price change. So if price elasticity is zero this means that quantity of goods purchased is not changing as compared to the price change. Thus this concept can be elaborated to comment upon negative price elasticity of demand.
Complete Step-by-Step solution:
Now using the concept stated above clearly good Y is more elastic as compared to good X because the percentage of quantity of good purchased is eventually changing with the price change in case of good Y , but however in case of good X it’s zero.
Hence we can say that good Y is more elastic as compared to good X.
Note – Whenever we face such types of problems the key concept is simply to have the basic understanding of the definition of price elasticity. This helps in comparison between various price elasticity of different goods.