Interactive Graph

An interactive cartesian graph is displayed, the elements on the graph and the starting position look as follows.

Description.

When interaction is completed properly the new positions of the elements have changed to look as follows.

Description.

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Image of a cartesian graph is displayed, the elements on the graph and the starting position look as follows. Description

Experiment with the demand curve.

Use the drag handle (the large blue dot) on the demand curve to make the demand curve flatter or steeper.

Goods and services that are relatively more inelastic include ones without many substitutes, that are necessities, and that are small portions of an individual’s budget.

Examples include gasoline, food, and bubble gum.

Can you think of other relatively inelastic goods?

Goods and services that are relatively more elastic include ones with many substitutes, that are luxuries, and that are large portions of an individual’s budget.

Examples include oranges, nice watches, and yachts.

Can you think of other relatively elastic goods?

Goods and services that are perfectly inelastic are absolute necessities.

One example would be a pacemaker battery or life-saving medicine.

Can you think of other perfectly inelastic goods?

Goods and services that are perfectly elastic have perfect substitutes or are set at a single, acceptable, price.

A couple of examples would be hotdogs from two different hotdog stands, or $10 bills.

Can you think of other perfectly elastic goods?

Remember: A demand curve does not have an upward slope.

You have rotated the demand curve to make it steeper than it previously was.

Making the curve steeper represents a relatively more inelastic good or service in terms of price elasticity of demand.

You have rotated the demand curve to make it flatter than it previously was.

Making the curve flatter represents a relatively more elastic good or service in terms of price elasticity of demand.

You have rotated the demand curve to make it vertical.

Making the curve vertical represents a perfectly inelastic good or service in terms of price elasticity of demand.

You have rotated the demand curve to make it horizontal.

Making the curve horizontal represents a perfectly elastic good or service in terms of price elasticity of demand.

Remember: A demand curve does not have an upward slope.

As you can see, the same change in price now leads to a SMALLER change in quantity demanded.

The definition of a relatively inelastic demand is that quantity demanded does not experience a huge change when the price changes.

This graph shows exactly that.

As you can see, the same change in price now leads to a LARGER change in quantity demanded.

The definition of a relatively elastic demand is that quantity demanded experiences a huge change when the price changes.

This graph shows exactly that.

As you can see, the same change in price now leads to NO CHANGE at all in quantity demanded.

The definition of a perfectly inelastic demand is that quantity demanded does not change at all when the price changes.

This graph shows exactly that.

As you can see, the same change in price now leads to AN ABSOLUTE CHANGE in quantity demanded.

The definition of a perfectly elastic demand is that quantity demanded changes infinitely when the price changes.

This graph shows exactly that.

Remember: A demand curve does not have an upward slope.