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Perfectly Inelastic and Perfectly Elastic Supply

	When supply is fixed, sellers have no opportunity to vary the quantity they can offer. A perfectly inelastic supply curve for a good is a vertical line above a certain minimum price necessary to induce sellers to make the good available for sale. No matter what the percentage change in price above this minimum price, the percentage change in quantity supplied is always 0. Price elasticity of supply is always 0 along such a curve. Note that the supply curve doesn't hit the horizontal axis. This is because sellers require a minimum price before they'll make the item available for sale in a market. The supply of land in the United States is close to perfectly inelastic. No matter how much the price of land changes, there's unlikely to be any appreciable change in the total amount of usable land in the country.
	The elasticities of supply of many goods are likely to be close to zero for very short periods. For example, the supply of fresh fish on a given day after the fishing fleet has brought in its catch will be perfectly inelastic. It takes time to catch more. Over time, the supply of fish will be more elastic, as higher prices induce fishers to catch more. As you can see in graph A in Box 8, when supply is perfectly inelastic, an increase in demand results in an increase in market price, but has no effect on quantity supplied. However, if the price were below P0, fishers wouldn't go out fishing and the quantity supplied would be zero.

	A perfectly elastic supply curve is a horizontal line, such as that in graph B in Box 8. Price elasticity of supply is infinite on this line. You can think of such a supply curve as meaning that the slightest change in price would result in an infinite change in quantity supplied. The horizontal line also means that any change in demand results in a change in quantity supplied, but no change in price is necessary to induce sellers to supply more.

	In effect, the supply curve of cheeseburgers to you in a McDonald's is probably shaped like the one drawn in graph B. You can buy all the cheeseburgers you want at the established price without causing the price to go up. In effect, to any particular buyer in a competitive market, the supply curve of a good will be perfectly elastic.

	Another example of perfectly elastic supply would be an industry where, over a long period, the prices of inputs necessary to produce output don't increase as output increases. This means that no price increases would be required to increase quantities supplied, because costs per unit of the good wouldn't increase as more was made available. There's evidence that the supply of new residential construction is nearly infinitely elastic over the long run. Other things being equal, this implies that any increases in the price of new construction per square foot over short periods will eventually be balanced by future price declines. Over a long period, an increase in demand results in an increase in quantity supplied, but no increase in market price. Temporary price increases tend to attract new firms into the construction industry. The resulting increase in supply acts to decrease price over a longer period.

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