Perfectly Elastic Demand Curve    To the right is a perfectly elastic demand curve. For this curve .

   At the price P, any quantity can be demanded. But if the price drops below P even slightly, none of the good is purchased at all. Thus, the %Q is nearly infinite and the %P is nearly zero, leading to . While rare for individuals, we will see that infinite elasticity plays an important role in our study of industrial structure.

Copyright © 1995-2004 OnLineTexts.com, Inc. - All Rights Reserved