Figure 5.6:
FIGURE
5-6
Two Extreme Cases of Price Elasticity of Supply
Figure 5.6: Panel (a) shows a perfectly inelastic supply curve, which is a vertical line. The price elasticity of supply is zero: the quantity supplied is always the same, regardless of price. Panel (b) shows a perfectly elastic supply curve, which is a horizontal line. At a price of $12, producers will supply any quantity, but they will supply none at a price below $12. If price rises above $12, they will supply an extremely large quantity.