A good with a vertical demand curve has zero elasticity.

A good with a vertical demand curve has zero elasticity.

• A. Infinite
• B. Unit
• C. Zero
• D. Varying

Answer: (C)

Elasticity of demand measures how responsive quantity demanded is to price changes. A vertical demand curve means quantity demanded does not change at all when price changes. In the elasticity formula, the numerator is the percentage change in quantity demanded. Since that change is zero, elasticity = 0 divided by any nonzero price change, which equals zero. So the price changes without affecting how much people buy, describing perfectly inelastic demand. This is different from infinite elasticity (which would occur if a tiny price change caused a huge change in quantity, shown by a horizontal demand curve), and from unit elasticity (where quantity and price change by the same percentage). Elasticity that varies along the curve would apply to a typical downward-sloping demand, where elasticity is not constant. Here, the vertical curve gives zero elasticity.

Elasticity of demand measures how responsive quantity demanded is to price changes. A vertical demand curve means quantity demanded does not change at all when price changes. In the elasticity formula, the numerator is the percentage change in quantity demanded. Since that change is zero, elasticity = 0 divided by any nonzero price change, which equals zero. So the price changes without affecting how much people buy, describing perfectly inelastic demand.

This is different from infinite elasticity (which would occur if a tiny price change caused a huge change in quantity, shown by a horizontal demand curve), and from unit elasticity (where quantity and price change by the same percentage). Elasticity that varies along the curve would apply to a typical downward-sloping demand, where elasticity is not constant. Here, the vertical curve gives zero elasticity.