If the demand for a commodity remains constant as price increases, the commodity is said to be

Analyze the question: The question says demand stays constant (quantity demanded does not change at all) even when price rises. We need the term for this type of price elasticity of demand (PED).

Concept: Price elasticity of demand = % change in quantity demanded ÷ % change in price

| Type | PED value | Meaning | |---|---|---| | Perfectly inelastic | 0 | Quantity does not change at all when price changes | | Price inelastic | between 0 and 1 | Quantity changes by a smaller percentage than price | | Unit elastic | 1 | Quantity changes by the same percentage as price | | Price elastic | greater than 1 | Quantity changes by a larger percentage than price | | Perfectly elastic | infinity | Any price rise reduces quantity demanded to zero |

Solution:

• Price increases, so the % change in price is greater than 0.
• Demand is constant, so the % change in quantity demanded = 0.
• PED = 0 ÷ (% change in price) = 0

A PED of 0 means demand is perfectly price inelastic. Its demand curve is a vertical straight line.

Checking the options:

• A. Perfectly price inelastic: PED = 0, which matches.
• B. Unit price elastic: PED = 1, which does not match.
• C. Price elastic: PED > 1, which does not match.
• D. Price inelastic: this means quantity does fall, only by a smaller proportion. Here it does not fall at all, so this is not the best answer.

Correct answer: A

Exam tip: Look for the key phrase. "Does not change at all" or "remains constant" means perfectly inelastic (vertical curve, PED = 0). "Changes by a smaller proportion" means inelastic. Examples of near-perfectly inelastic goods are life-saving drugs such as insulin for diabetics.