FIGURE 1 THE SHAPE AND ELASTICITY OF DEMAND CURVES
The horizontal demand curve in panel A represents perfectly elastic demand because when price increases, quantity demanded drops to zero. Panel E, on the other hand, illustrates a perfectly inelastic demand curve where quantity demanded does not change when the price changes. Panel B shows an elastic demand curve, which is relatively flat, and panel D shows an inelastic demand curve, which is relatively steep. Panel C shows that if elasticity of demand is unitary, then a 1% increase in price will result in a 1% decrease in quantity demanded. Note that the unitary elastic demand curve is not a straight line.