WBCS.LIVE practice question

If the price elasticity of demand for a critical life-saving drug is determined to be exactly zero, the demand curve is:

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Perfectly horizontal
  2. Upward sloping
  3. Perfectly vertical
  4. Downward sloping

Correct answer and explanation

Correct answer: Perfectly vertical

Explanation: āœ… Correct Answer: C) Perfectly vertical šŸ“š Explanation: When the calculated price elasticity of demand is exactly zero, the specific quantity demanded does not change at all regardless of how drastically the price fluctuates. This rigid scenario is known in microeconomics as perfectly inelastic demand, which is highly typical for absolutely essential goods like life-saving medications or insulin. Graphically, this mathematical relationship is represented on a chart by a perfectly vertical demand curve.