Learning Path
Question & Answer
Choose the Best Answer
Demand will decrease significantly with any price increase.
Quantity demanded remains constant regardless of price changes.
Consumers will stop purchasing the good if the price rises.
Demand is sensitive to price changes.
Understanding the Answer
Let's break down why this is correct
When demand is perfectly inelastic, the quantity demanded does not change no matter how the price moves. Other options are incorrect because The idea that demand will drop sharply with a price rise is a common mistake; Stopping purchases when the price rises is another misconception.
Key Concepts
Price Elasticity of Demand
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Deep Dive: Price Elasticity of Demand
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Definition
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It quantifies how much the quantity demanded will change in percentage terms in response to a one percent change in price. Elasticity values help determine the sensitivity of demand to price fluctuations.
Topic Definition
Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It quantifies how much the quantity demanded will change in percentage terms in response to a one percent change in price. Elasticity values help determine the sensitivity of demand to price fluctuations.
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