Question

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

Short answer

A demand or supply curve with zero elasticity, representing perfect inelasticity, is depicted as a vertical line parallel to the price axis. This indicates that the quantity demanded or supplied remains consistent regardless of any price changes, with consumers and producers being unaffected or unresponsive to changing price levels.

Step-by-step solution

Understanding Elasticity

Elasticity is a measure of the responsiveness of demand or supply to a change in price. It tells us how sensitive the quantity demanded or supplied is to a change in price. In general, the elasticity of demand or supply can be represented as: \[E = \frac{\% \text{ change in quantity demanded or supplied}}{\% \text{ change in price}}\] Elasticity can take on various values: - Elasticity > 1: Elastic (responsive to price change) - Elasticity < 1: Inelastic (less responsive to price change) - Elasticity = 1: Unit elastic (proportionally responsive) - Elasticity = 0: Perfectly inelastic (no response to price change) In this case, we are asked to describe a demand or supply curve with zero elasticity, which means a perfectly inelastic situation.

Demand Curve with Zero Elasticity

A perfectly inelastic demand curve is one where the quantity demanded does not change as the price changes. This means that the elasticity of demand is zero, because any percent change in price would have no effect on the quantity demanded. The general appearance of a demand curve with zero elasticity is a vertical line parallel to the price axis. This is because the quantity demanded remains the same at all prices. In other words, consumers are not sensitive to any price changes and will continue to consume the same quantity regardless of the price level.

Supply Curve with Zero Elasticity

Similarly, a perfectly inelastic supply curve is one where the quantity supplied does not change as the price changes. This means that the elasticity of supply is zero, because any percent change in price would have no effect on the quantity supplied. The general appearance of a supply curve with zero elasticity is also a vertical line parallel to the price axis. This is because the quantity supplied remains the same at all prices. In other words, producers are not sensitive to any price changes and will continue to produce the same quantity regardless of the price level. In summary, both demand and supply curves with zero elasticity have a general appearance of a vertical line parallel to the price axis, representing perfect inelasticity, where the quantity demanded or supplied is unresponsive to any changes in price.