If demand is perfectly inelastic, then:
A) the own price elasticity of demand is infinite in absolute value.
B) a small increase in price will lead to a situation where none of the good is purchased.
C) the demand curve is vertical.
D) None of the statements is correct.

Question

Quizplus · Accepted Answer

If demand is perfectly inelastic, it means that there is no change in the quantity demanded even if there is a change in the price. Therefore, the demand curve is vertical, as the quantity demanded remains constant regardless of the price. Option A is incorrect because the own price elasticity of demand is zero when demand is perfectly inelastic. Option B is incorrect because a small increase in price does not lead to a situation where none of the good is purchased in a perfectly inelastic demand curve. Option D is incorrect because option C is correct.

If Demand Is Perfectly Inelastic, Then