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Perfectly Inelastic Demand

Is a term used to relate to a good that has a price elasticity of demand value of 0. This essentially means that the quantity demanded by consumers for this good does not depend on the price of the good i.e. consumers will demand the same quantity of the good at every possible price.

We can represent a perfectly inelastic demand curve via a vertical demand curve as shown below:

For this demand curve the PED values are equal to 0 at all points and therefore changes to prices have no effect on quantity demanded e.g. diabetic patients demand for insulin.

Perfectly inelastic demand also arises if the price of a good is zero and quantity demanded is at its maximum possible level. However, this is only of theoretical significance as even a 1p rise in price will mean that elasticity rises above this level.

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