Figure 5.2: FIGURE 5-2 Two Extreme Cases of Price Elasticity of Demand
Figure 5.2: Panel (a) shows a perfectly inelastic demand curve, which is a vertical line. The quantity of snake anti-venom demanded is always 1,000 doses, regardless of price. As a result, the price elasticity of demand is zero—the quantity demanded is unaffected by the price. Panel (b) shows a perfectly elastic demand curve, which is a horizontal line. At a price of $5, consumers will buy any quantity of pink tennis balls, but they will buy none at a price above $5. If the price falls below $5, they will buy an extremely large number of pink tennis balls and none of any other color.