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  • Review Chap 5

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    Daisy Freeman
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    Demand is said to be perfectly inelastic when the price elasticity of demand equals 0 and the demand curve is vertical, meaning that changes in price do not affect the quantity demanded. Demand is inelastic when the price elasticity is less than 1 and the demand curve is steep. Demand has unit elasticity when the price elasticity equals 1. Demand is elastic when the price elasticity is greater than 1 and the demand curve is flatter, and demand is perfectly elastic when the price elasticity is infinite and the demand curve is horizontal.

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    Review-Chap-5 (1)

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    Demand is said to be perfectly inelastic when the price elasticity of demand equals 0 and the demand curve is vertical, meaning that changes in price do not affect the quantity demanded. Demand is inelastic when the price elasticity is less than 1 and the demand curve is steep. Demand has unit elasticity when the price elasticity equals 1. Demand is elastic when the price elasticity is greater than 1 and the demand curve is flatter, and demand is perfectly elastic when the price elasticity is infinite and the demand curve is horizontal.

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    2 views4 pages

    Review Chap 5

    Uploaded by

    Daisy Freeman
    Demand is said to be perfectly inelastic when the price elasticity of demand equals 0 and the demand curve is vertical, meaning that changes in price do not affect the quantity demanded. Demand is inelastic when the price elasticity is less than 1 and the demand curve is steep. Demand has unit elasticity when the price elasticity equals 1. Demand is elastic when the price elasticity is greater than 1 and the demand curve is flatter, and demand is perfectly elastic when the price elasticity is infinite and the demand curve is horizontal.

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    of 4

    chap 3

    price elasticity -
    SQp

    of demand 1S price

    o& price
    %
    = P2-P1.100
    PI
    -miolpoint

    AQ/ midpoint Q
    =

    AP/ midpoint P
    Demand is perfectly inelastic
    • Price elasticity of demand = 0
    • Demand curve is vertical

    – Demand is inelastic
    • Price elasticity of demand < 1

    steeper
    =>

    – Demand has unit elasticity


    • Price elasticity of demand = 1
    – Demand is elastic
    • Price elasticity of demand > 1

    – Demand is perfectly elastic


    • Price elasticity of demand = infinity
    • Demand curve is horizontal
    • The flatter the demand curve
    – The greater the price elasticity of
    demand

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