Match the following.

1-C, 2-A, 3-D, 4-B

The correct answer is Option 2: 1-C, 2-A, 3-D, 4-B

Price elasticity of demand measures the degree of responsiveness of the quantity demanded of a commodity to the change in price of the good. It is measured as: P_ed =  \(\frac{\text {% change in quantity demanded}}{\text {% change in price }}\)

In the above match the following, we are talking about various degrees of price elasticity of demand and its examples, which are correctly paired as follows:

• Perfectly elastic demand i.e. ed = ∞ - Imaginary situations like perfect competition. Perfect elastic demand is considered a theoretical extreme case and there isn't really any real-life product that could be considered perfectly elastic. When a small change in price of a product causes a major change in its demand, it is said to be perfectly elastic demand. In perfectly elastic demand, a small rise in price results in fall in demand to zero, while a small fall in price causes increase in demand to infinity.
• Perfectly inelastic demand i.e. ed = 0 - Essentials like life saving drugs, salt etc. Perfectly inelastic demand is an economic condition in which a change in the price of a product or a service has no impact on the quantity demanded or supplied because the elasticity of demand or supply is equal to zero.
• Unitary elastic demand i.e. ed = 1 - Normal goods like scooter, fans etc.
• Greater than unitary elastic demand i.e. ed > 1 - Luxuries like eating in a 7 star hotel
• Less than unitary elastic demand i.e. ed < 1 - Necessities like food, fuel etc.