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The Basic of Economics, Open Economy - Macroeconomics
At the same time there is inelastic, perfectly elastic and unit elasticity demands. Perfectly inelastic demand is when the demand does not respond strongly to the price changes, where the perfect inelastic creates a market where the demand does not respond to the price change. In perfectly elastic situation quantity demanded changes infinitely with any change in price. While in unit elastic quantity demanded changes by the same % as the price. It is important to notice that only unit elastic quantity can exist.
Mawkin states “the price elasticity of supply measures how much the quantity supplied responds to changes in the price. Supply of a good is said to be elastic if the quantity supplied responds substantially to changes in the price. Supply is said to be inelastic if the quantity supplied responds only slightly to changes in the price.” Once again the correlation between the demand and supply is shown.
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- The Basic of Economics, Open Economy - Macroeconomics
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