Figure

Completely Inelastic Demand Curve: ep = 0

With perfectly inelastic demand, a fixed level of output is demanded irrespective of price.

Quantity demanded per time period

The economic as well as mathematical properties of these limiting cases should be understood. A firm faced with a vertical or perfectly inelastic demand curve could charge any price and still sell Q* units. Theoretically, such a firm could appropriate all of its customers' income or wealth. Conversely, a firm facing a horizontal or perfectly elastic demand curve could sell an unlimited quantity of output at the price P*, but it would lose all sales if it raised prices by even a small amount. Such extreme cases are rare in the real world, but monopolies that sell necessities such as pharmaceuticals enjoy relatively inelastic demand, whereas firms in highly competitive industries such as grocery retailing face highly elastic demand curves.

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