Demand is perfectly inelastic when
A)a good has perfect substitutes.
B)an increase in supply does not change total revenue.
C)a decrease in supply decreases total revenue.
D)the price elasticity of demand is negative.
E)an increase in supply does not change the equilibrium quantity.

Question

Quizplus · Accepted Answer

Perfectly inelastic demand means that the quantity demanded does not change regardless of changes in price. Choice E describes a situation where an increase in supply does not change the equilibrium quantity, implying that demand does not respond to price changes, which is characteristic of perfectly inelastic demand.

Demand Is Perfectly Inelastic When