The demand curve for a good is very unlikely to be perfectly vertical because
A) scarcity and limited income restrict the ability of consumers to afford goods as they become very expensive.
B) as the price of a good rises to high enough levels, the incentive for other suppliers to invent new substitutes for the good increases.
C) consumers generally do not care about the price of the goods they consume.
D) both a and b are true.

Question

Quizplus · Accepted Answer

A perfectly vertical demand curve implies that quantity demanded does not change with price changes. However, scarcity and limited income (A) restrict consumers' ability to purchase goods as prices rise, and high prices incentivize the creation of substitutes (B), both of which prevent the demand curve from being perfectly vertical.

The Demand Curve for a Good Is Very Unlikely to Be