Which statement describes perfectly inelastic demand?

Which statement describes perfectly inelastic demand?

• A. Elastic equal to 0
• B. Elastic greater than 1
• C. Elastic equal to 1
• D. Elastic negative

Answer: (A)

Elasticity of demand measures how much quantity demanded responds to price changes. Perfectly inelastic demand means the quantity demanded does not change at any price, so the percentage change in quantity is zero. Since elasticity is the percentage change in quantity divided by the percentage change in price, you get zero divided by something nonzero, which yields an elasticity of zero. Graphically, this is a vertical demand curve, showing no change in quantity as price moves. The other descriptions imply some responsiveness: elastic greater than one means a big drop in quantity when price rises; unit elastic means quantity changes proportionally with price; a negative elasticity reflects the usual inverse relation between price and quantity demanded (though we often refer to elasticity in absolute value). None of these capture the no-response condition as perfectly as zero does.

Elasticity of demand measures how much quantity demanded responds to price changes. Perfectly inelastic demand means the quantity demanded does not change at any price, so the percentage change in quantity is zero. Since elasticity is the percentage change in quantity divided by the percentage change in price, you get zero divided by something nonzero, which yields an elasticity of zero. Graphically, this is a vertical demand curve, showing no change in quantity as price moves.

The other descriptions imply some responsiveness: elastic greater than one means a big drop in quantity when price rises; unit elastic means quantity changes proportionally with price; a negative elasticity reflects the usual inverse relation between price and quantity demanded (though we often refer to elasticity in absolute value). None of these capture the no-response condition as perfectly as zero does.