- Perfect inelasticity
- Perfect inelasticity is the extreme case in which a percentage change in price, no matter how large, results in zero change in quantity.
- Perfect elasticity
- Perfect elasticity is the extreme case in which the quantity demanded or supplied changes by an infinite amount in response to any change in price at all.
Demand curves with the same elasticity all the way along
Can you name the three demand curves whose elasticity is the same at every point?
Most demand curves change elasticity along their length. These three do not.
A perfectly elastic curve is horizontal: on a demand curve, buyers take any quantity at one price and none at a higher one.
Can you think of an example?
A wheat farm sells its whole crop at the market price, but loses every buyer if it asks a penny more.
A perfectly inelastic curve is vertical: the same quantity is bought or sold whatever the price, an elasticity of zero.
Can you think of an example?
A patient who needs a life-saving drug with no substitute buys the same dose whether its price rises or falls.
A unit elastic demand curve is a rectangular hyperbola, bending from steep to flat, so total spending is the same at every point.
Can you think of an example?
A fan spends the same sum on concert tickets each month, buying fewer when they are dear and more when cheap.