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Chapter 5: Q.13 (page 130)

Describe the general appearance of a demand or a supply curve with zero elasticity.

Short Answer

Expert verified

A vertical line in the demand and supply framework represents zero elasticity when a percentage change in price, no matter how high, results in zero change in quantity.

Step by step solution

01

Definition

Types of Elasticity:

The percentage change in the quantity requested or quantity provided as a result of a percentage change in price is known as the price elasticity of demand and supply. The response of a customer or a producer to a change in a good's price is evaluated by the price elasticity of demand and supply.

02

Explanation

Elasticity is zero. Regardless of the price, the vertical supply and demand curves show that there would be no percentage change in quantity (a) required or (b) supplied.

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Most popular questions from this chapter

From the data in Table 5.6 about the supply of alarm clocks, calculate the price elasticity of supply from point J to point K, point L to point M, and point N to point P. Classify the elasticity at each point as elastic, inelastic, or unit elastic.

Would you expect supply to play a more significant role in determining the price of a basic necessity like food or a luxury like perfume? Explain. Hint: Think about how the price elasticity of demand will differ between necessities and luxuries.

Transatlantic air travel in business class has an estimated elasticity of demand of 0.62, while transatlantic air travel in economy class has an estimated price elasticity of 0.12. Why do you think this is the case?

If demand is inelastic, will shifts in supply have a larger effect on equilibrium price or on quantity?

A city has built a bridge over a river and it decides to charge a toll to everyone who crosses. For one year, the city charges a variety of different tolls and records information on how many drivers cross the bridge. The city thus gathers information about the elasticity of demand. If the city wishes to raise as much revenue as possible from the tolls, where will the city decide to charge a toll: in the inelastic portion of the demand curve, the elastic portion of the demand curve, or the unit elastic portion? Explain

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