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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 demand or supply curve with zero elasticity is vertical in shape.

Step by step solution

01

Step 1. Introduction:

Zero elasticity is also referred to as perfect inelasticity. It is a situation in which a percentage variation in price, irrespective of size, leads to a zero variation in quantity.

02

Step 2. Explanation:

As the amount of quantity demanded or supplied remains the same irrespective of the prevailing price level, a demand or supply curve with zero elasticity is vertical in shape. The shape of demand and supply curves with zero elasticity is illustrated in the figure below:

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Most popular questions from this chapter

What is the formula for calculating elasticity?

In competitive markets, farmers adopt new technologies that will eventually reduce their revenue because

a. each farmer is a price taker.

b. farmers are short-sighted.

c. regulation requires the use of best practices.

d. consumers pressure farmers to lower prices.

If demand is elastic, how will an increase in price change total revenue? Explain.

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

Suppose the price elasticity of demand for heating oil is 0.2 in the short run and 0.7 in the long run.

a. if the price of heating oil rises from \(1.80 to \)2.20 per gallon, what happens to the quantity of heating oil demanded in the short run? In the long run? (Use the midpoint method in your calculations.)

b. Why might this elasticity depend on the time horizon?
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