change in price, no matter how large, results in zero change in quantity. While a perfectly inelastic supply is an

extreme example, goods with limited supply of inputs are likely to feature highly inelastic supply curves.

Examples include diamond rings or housing in prime locations such as apartments facing Central Park in New
118 5 • Elasticity

York City. Similarly, while perfectly inelastic demand is an extreme case, necessities with no close substitutes

are likely to have highly inelastic demand curves. This is the case of life-saving drugs and gasoline.

FIGURE 5.5 Zero Elasticity The vertical supply curve and vertical demand curve show that there will be zero

percentage change in quantity (a) demanded or (b) supplied, regardless of the price.

Constant unitary elasticity, in either a supply or demand curve, occurs when a price change of one percent

results in a quantity change of one percent. Figure 5.6 shows a demand curve with constant unit elasticity.
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