How is perfectly inelastic demand defined?

How is perfectly inelastic demand defined?

• A. A change in price causes a significant change in quantity demanded
• B. A good's demand remains unchanged regardless of price changes
• C. The quantity demanded decreases when prices increase
• D. Price adjustments cause proportional changes in demand

Answer: (B)

Perfectly inelastic demand is defined as a situation where the quantity demanded of a good remains unchanged regardless of any changes in price. This means that consumers will purchase the same amount of the good no matter whether the price rises or falls. This concept is often represented by a vertical demand curve, indicating that the quantity demanded does not respond at all to price changes. A classic example of perfectly inelastic demand is essential medication; no matter the price, the quantity demanded remains constant because consumers need the medication regardless of cost. In contrast, other options address different relationships between price and quantity demanded. For instance, significant changes in quantity demanded in response to price changes indicate elastic demand, while proportional changes in demand reflect unitary elasticity. Therefore, option B accurately captures the essence of perfectly inelastic demand.

Perfectly inelastic demand is defined as a situation where the quantity demanded of a good remains unchanged regardless of any changes in price. This means that consumers will purchase the same amount of the good no matter whether the price rises or falls.

This concept is often represented by a vertical demand curve, indicating that the quantity demanded does not respond at all to price changes. A classic example of perfectly inelastic demand is essential medication; no matter the price, the quantity demanded remains constant because consumers need the medication regardless of cost.

In contrast, other options address different relationships between price and quantity demanded. For instance, significant changes in quantity demanded in response to price changes indicate elastic demand, while proportional changes in demand reflect unitary elasticity. Therefore, option B accurately captures the essence of perfectly inelastic demand.