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Chapter 5: Q.14 (page 130)

Describe the general appearance of a demand or a supply curve with infinite elasticity.

Short Answer

Expert verified

At a given price, there is an endless amount of quantity demanded or provided.

Step by step solution

01

Step: Definition

Demand and supply curve:

While demand is concerned with the desire of the consumer to make a profit, supply is concerned with the desire of the supplier to make a profit. A supply schedule depicts the quantity of product that a supplier is willing and able to offer the market at particular price points over a specified time period.

02

Step 2; Explanation

If a demand or supply curve has infinite elasticity, it means it is perfectly elastic. As a result, the quantity supplied or sought reacts quickly to price changes. A curve like this is horizontal and parallel to the x axis.

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Most popular questions from this chapter

Transatlantic air travel in business class has an estimated elasticity of demand of 0.62, while transatlantic air travel in economy class has an estimated price elasticity of 0.12. Why do you think this is the case?

Say that a certain stadium for professional football has 70,000 seats. What is the shape of the supply curve for tickets to football games at that stadium? Explain

Assume that the supply of low-skilled workers is fairly elastic, but the employers’ demand for such workers is fairly inelastic. If the policy goal is to expand employment for low-skilled workers, is it better to focus on policy tools to shift the supply of unskilled labor or on tools to shift the demand for unskilled labor? What if the policy goal is to raise wages for this group? Explain your answers with supply and demand diagrams.

Economists define normal goods as having a positive income elasticity. We can divide normal goods into two types: Those whose income elasticity is less than one and those whose income elasticity is greater than one. Think about products that would fall into each category. Can you come up with a name for each category?

If supply is elastic, will shifts in demand have a larger effect on equilibrium quantity or on price?
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