Perfectly Elastic and Inelastic
Perfectly Inelastic
This means when price rises, quantity demanded does not change at all. The elasticity anywhere along this demand curve would be 0.
Example: Medicine a patient needs to live (insulin for a diabetic).
Perfectly Elastic
This means when price rises, quantity demanded falls by an infinite amount. The elasticity anywhere along this demand curve would be negative infinity.
Example: Lettuce, wheat, gas at the gas station.
Example: Steep and Flat Demand Curves
The demand for a luxury good will be ___________ than the demand for a necessity good.
A) steeper
B) flatter
C) the same as
D) steeper or flatter
B. Remember a luxury good (like a nice watch) is more elastic which means a flatter demand curve. Necessity goods (like water) are more inelastic which means steeper.