Question

Draw three demand curves showing the same value of price elasticity of demand at all the points.

Draw demand curves showing e_p = 0, e_p = 1 and e_p = ∞.

Answer 1

1. Perfectly inelastic: A demand curve that runs parallel to the vertical axis (D₁) represents zero elasticity, indicating a perfectly inelastic demand.
   
2. Perfectly elastic: The demand curve D₂, which lies parallel to the X-axis, indicates an infinite price elasticity (e_p = ∞). This represents a perfectly elastic demand.
   
3. Unitary elastic: The demand curve O₃, shaped like a rectangular hyperbola, reflects unitary elasticity at every point along the curve.