9781118041581

86 Chapter 3 Demand Analysis and Optimal Pricing

FIGURE 3.2

Two Extreme Cases

The vertical demand

curve in part (a)

represents perfectly

inelastic demand,

EP0. The horizontal

demand curve in part

(b) represents perfectly

elastic demand,

EP    .

Price

50 100 150 200 250 Quantity

10

30

20

50

40

70

60

80

90

$100

(a) Perfectly Inelastic Demand

EP = –∞

EP = 0

0

Price

50 100 150 200 250 Quantity

1

3

2

5

4

7

6

8

9

$10

(b) Perfectly Elastic Demand

0

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