If a change in price has no effect on the quantity demanded, the PED is?

If a change in price has no effect on the quantity demanded, the PED is?

• A. Perfectly Elastic Demand
• B. Perfectly Inelastic Demand
• C. Unit Elasticity of Demand
• D. Elastic Demand

Answer: (B)

This tests price elasticity of demand—the responsiveness of quantity demanded to price changes. If a change in price has no effect on the quantity demanded, the elasticity is zero, which describes perfectly inelastic demand. That means the demand curve is vertical: people buy the same amount no matter how the price shifts. This happens with essential goods or services with no close substitutes, where buyers must purchase a fixed quantity. Since the percentage change in quantity is zero, PED = 0. So the term that fits is perfectly inelastic demand.

This tests price elasticity of demand—the responsiveness of quantity demanded to price changes. If a change in price has no effect on the quantity demanded, the elasticity is zero, which describes perfectly inelastic demand. That means the demand curve is vertical: people buy the same amount no matter how the price shifts. This happens with essential goods or services with no close substitutes, where buyers must purchase a fixed quantity. Since the percentage change in quantity is zero, PED = 0. So the term that fits is perfectly inelastic demand.