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Chapter 5: Q.14 (page 130)

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

Short Answer

Expert verified

A demand or supply curve with infinite elasticity is horizontal in shape.

Step by step solution

01

Step 1. Introduction:

Infinite elasticity is an extremely elastic case of demand or supply where quantity varies by an infinite amount due to any variation in price.

02

Step 2. Explanation:

As the quantity demanded or supplied keeps on increasing irrespective of how small the intensity of a price change is, the demand or supply curve with infinite elasticity is horizontal in shape. The demand and supply curves with infinite elasticity are illustrated in the figure below:

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Most popular questions from this chapter

What is the formula for the income elasticity of demand?

What is the formula for calculating elasticity?

Suppose you are in charge of sales at a pharmaceutical company, and your firm has a new drug that causes bald men to grow hair. Assume that the company wants to earn as much revenue as possible from this drug. If the elasticity of demand for your company鈥檚 product at the current price is 1.4, would you advise the company to raise the price, lower the price, or to keep the price the same? What if the elasticity were 0.6? What if it were 1? Explain your answer.

What is the price elasticity of supply? Can you explain it in your own words?

Would you usually expect elasticity of demand or supply to be higher in the short run or in the long run? Why?
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