How does one go about interpreting a case of inelastic supply and demand that are based at different quantities? There is no equilibrium in such a case and therefore nothing supplied or demanded.

Two Questions

1.How would one go about looking at the the type of good we have here?

2. Is this case even possible?

Inelastic Supply and Demand at different quantities


1 Answer 1

  1. I am not sure what you mean by looking, but there is no equilibrium in this market, so any equilibrium analysis is impossible.

  2. Situations like this are possible. Consider the Titanic. Supply of lifeboat spaces are limited and do not change depending on the price. People are willing to pay any price.

There are limitations on what an individual can pay by money though. One might argue that there were a lot of people who were willing to do anything to get a space (push in line, etc.). As long as the number of these people is larger than the supply and the price is measured in effort your graph would describe the market for places.

  • $\begingroup$ Ah, so we cannot analyse how goods (or boats in your case) will be distributed on the basis of price, correct? $\endgroup$
    – EconJohn
    Aug 10, 2016 at 16:37
  • 1
    $\begingroup$ Not without knowing more about the dynamics of the market, no. $\endgroup$
    – Giskard
    Aug 10, 2016 at 19:39

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