Problem 14 Describe the general appearance ... [FREE SOLUTION]

Chapter 5: Problem 14

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

Short Answer

Expert verified

The general appearance of a demand or a supply curve with infinite elasticity is a perfectly horizontal line. This indicates that even the smallest change in price will cause an infinitely large change in the quantity demanded or supplied, signifying a high sensitivity to price changes.

Step by step solution

Define Elasticity and Infinite Elasticity

Elasticity measures the responsiveness of quantity demanded or supplied to a change in price. It is calculated as the percentage change in quantity divided by the percentage change in price. Infinite elasticity means that even a tiny change in price leads to an infinitely large change in quantity demanded or supplied.

Understanding the Demand Curve

A demand curve represents the relationship between the price of a product and the quantity demanded by consumers. When elasticity is high, the curve will be flatter, indicating a greater response in quantity demanded to price changes. When elasticity is low, the curve will be steeper, indicating a lower response in quantity demanded to price changes.

Understanding the Supply Curve

A supply curve represents the relationship between the price of a product and the quantity supplied by producers. Similar to the demand curve, when elasticity is high, the curve will be flatter, indicating a greater response in quantity supplied to price changes. When elasticity is low, the curve will be steeper, indicating a lower response in quantity supplied to price changes.

General Appearance of a Demand Curve with Infinite Elasticity

If a demand curve has infinite elasticity, it will be perfectly horizontal. This horizontal line represents that even the smallest change in price will cause an infinitely large change in quantity demanded. In this situation, the quantity demanded is highly sensitive to any changes in price.

General Appearance of a Supply Curve with Infinite Elasticity

If a supply curve has infinite elasticity, it will also be perfectly horizontal. This horizontal line indicates that even a minor change in price will cause an infinitely large change in quantity supplied. In this case, the quantity supplied is extremely sensitive to any changes in price. In conclusion, the general appearance of a demand or a supply curve with infinite elasticity is a perfectly horizontal line, indicating that any change in price will cause an infinitely large change in the quantity demanded or supplied.