Question

Sellers of bottled water find that whether the price falls or rises, the quantity bought by consumers remains unchanged every week. The price elasticity of demand for bottled water is:

(A) inelastic.
(B) elastic.
(C) perfectly inelastic.
(D) perfectly elastic.
(E) unitary elastic.

Answer 1

(C) perfectly inelastic.

Step-by-step explanation:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Demand is perfectly inelastic if a change in price has no effect on quantity demanded. Quantity demanded remains unchanged no matter the change in price.

Water is assumed to be a necessity so demand would not change no matter the change in price.

Demand is inelastic when a change in price has little or no effect on quantity demanded.

Demand is elastic when a change in price has a greater effect on the quantity demanded.

Demand is unitary elastic when a change in price has an equal erfect on quantity demanded.

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