Economists use sophisticated statistical analysis and calculus to estimate the shapes of demand curves. In the real world, demand curves are rarely linear. Most demand curves fall between these two extremes, but can be described based on how close they are to one or the other. Perfectly competitive markets theoretically face a perfectly elastic demand curve. In fact, any increase in price at all would result in no sales. In that case, customers are extremely sensitive to price changes. That curve would be called perfectly elastic. No matter what the price is, the same volume to get sold.Īt the other end of the spectrum, the demand curve would be horizontal, suggesting a slope of zero. That demand curve would be called perfectly inelastic - meaning that consumers are insensitive to price changes. In one extreme, the demand curve would be vertical, suggesting a slope of infinity. The slope of the line indicates how sensitive consumers are to changes in price. For simplicity, most demand curves are drawn as straight lines (linear). They can be straight lines, curved, kinked, or even discontinuous. Demand curves can vary in shape, giving rise to different types of curves.
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