matter how large, results in zero change in the quantity; vertical in appearance

Key Concepts and Summary

5.1 Price Elasticity of Demand and Price Elasticity of Supply

Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its

price. We compute it as the percentage change in quantity demanded (or supplied) divided by the percentage

change in price. We can describe elasticity as elastic (or very responsive), unit elastic, or inelastic (not very

responsive). Elastic demand or supply curves indicate that quantity demanded or supplied respond to price

changes in a greater than proportional manner. An inelastic demand or supply curve is one where a given

percentage change in price will cause a smaller percentage change in quantity demanded or supplied. A
unitary elasticity means that a given percentage change in price leads to an equal percentage change in

quantity demanded or supplied.
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