demand is perfectly inelastic when shifts

The best real-world example of perfectly inelastic demand is a cancer drug that can cure a fatal cancer.At quantity Q i, the market demands whatever is provided, regardless of the price.On the other hand, no farmers will sell for less, since they can sell all that they have for the going rate.

No farmer can sell for more than the going price, since buyers can easily buy from their competitors. A perfectly elastic demand can be best illustrated by farmers selling corn in a competitive marketplace.

Below P e, the market would also demand the quantity provided.

At P e, the market demand equals the quantity provided.

Graphs of Perfectly Elastic and Perfectly Inelastic Demand Elasticity of Demand If demand elasticity If the price change percentage is equal, though opposite, to the percentage change in quantity, then demand for the product is said to have unit elasticity.

If a small change in price results in large changes in the quantity demanded, then demand is elastic. If a large change in price results in little change in the quantity demanded, then demand is inelastic.

The price elasticity of demand = the percentage change in quantity demanded divided by the percentage change in price.

Demand is perfectly inelastic when shifts