Perfectly Inelastic Demand

Perfectly inelastic demand is the situation where there no change in quantity demanded even there is change in price of the goods, the the demand is said to be perfectly inelastic. Simply mean no change in demand for change in price. In accordance to the law of demand, the demand for goods and services changes when there is change in its price. But the relationship between demand and price may not be the equal in all the market conditions, it may be different from product to product or time to time or market to conditions. So as to understand extent of the effect of price on the demand, one should know about the price elasticity of demand concepts.

To make easy to understand the concept of perfectly inelastic demand, it is presented in the graphical presentation in the below diagram.

See the graph, price of the goods changing or raises from P1 to P2 and P3 but there is no change in demand at Q.

In fact the quantity demand should not be changed without change in price according to the law of demand, but at times in case of some essential commodities and emergency services, the demand will be perfectly elastic when price remains unchanged.

An example of perfectly inelastic demand would be a lifesaving drug that people will pay any price to obtain. Even if the price of the drug would increase dramatically, the quantity demanded would remain unchanged.

Suppose, the price of a commodity changes by 50% but change in demand for said commodity is zero, then 0

EP = 0 / 50 = 0

Example: Emergency services, drugs and essential food item have perfectly inelastic demand. The price of food item may increase or decrease; there will be no change in the demand for such goods and services