Figure 4-3 Three Demand Curves with Constant Elasticity
Elasticity approaches infinity as we get closer to where the demand curve
intersects the vertical axis; elasticity approaches zero as we get closer to
where the demand curve intersects the horizontal axis.
Each of these demand curves has a constant elasticity. has zero
elasticity: The quantity demanded is equal to independent of the
price. has infinite elasticity at the price A small price increase from
decreases quantity demanded from an indefinitely large amount to
zero. has unit elasticity: A given percentage increase in price brings an
equal percentage decrease in quantity demanded at all points on the
curve; it is a rectangular hyperbola for which price times quantity
demanded is a constant.
D 1
Q 0 ,
D 2 p 0 :
p 0
D 3