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Chapter 5: Problem 13

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

Short Answer

Expert verified
A demand or supply curve with zero elasticity, representing perfectly inelastic demand or supply, appears as a vertical straight line. This indicates that the quantity demanded or supplied remains constant, regardless of any changes in price.

Step by step solution

01

1. Understanding Elasticity

Elasticity is a measure of the responsiveness of quantity demanded or supplied to changes in price. It is used to understand how sensitive consumers or producers are to price fluctuations. Elasticity can be calculated as the percentage change in quantity demanded or supplied divided by the percentage change in price. There are two extreme cases of elasticity: perfectly inelastic (elasticity equals zero) and perfectly elastic (elasticity equals infinity).
02

2. Perfectly Inelastic Demand or Supply

When the elasticity of demand or supply is zero, the curve is perfectly inelastic. In this case, the quantity demanded or supplied does not change when the price changes. This implies that consumers or producers are insensitive to price changes, and the product is viewed as a critical necessity. Perfectly inelastic demand or supply curves are vertical lines, as the quantity remains fixed at all price levels.
03

3. Describing the appearance of the curve with zero elasticity

As we have mentioned before, a demand or a supply curve with zero elasticity is perfectly inelastic, and their appearance will be a vertical straight line. The curve will indicate that the quantity demanded or supplied does not change regardless of any changes in price. In summary, a demand or supply curve with zero elasticity is represented by a vertical line as it indicates that the quantity demanded or supplied remains the same regardless of any changes in the price.

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Most popular questions from this chapter

Transatlantic air travel in business class has an estimated elasticity of demand of 0.40 less than transatlantic air travel in economy class, with an estimated price elasticity of 0.62. Why do you think this is the case?

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

What is the formula for elasticity of savings with respect to interest rates?

The equation for a demand curve is P = 48 – 3Q. What is the elasticity in moving from a quantity of 5 to a quantity of 6?
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