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OFFICE OF MANAGEMENT AND BUDGET: An office within the Executive branch (specifically within the Office of the White House), that assists the President in various fiscal matters. Established in 1970, the Office of Management and Budget (OMB) is responsible for developing the President's annual budget request to Congress, managing the Executive Branch, and evaluating Federal government regulations. The OMB staff are appointed by the President, but unlike other appointments, they do not need Senate confirmation. The duty of preparing the fiscal budget, and what this means for fiscal policy, has made the director of the OMB one of the more influential economic positions in country, ranking just a notch below the Chairman of the Federal Reserve System's Board of Governors and the Chairman of the Council of Economic Advisors. The Congressional counterpart of the OMB is the Congressional Budget Office (CBO).
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                           PERFECTLY INELASTIC: An elasticity alternative in which changes in one variable (usually price) do NOT cause any changes in another variable (usually quantity). Quantity is totally, completely unresponsive to price. Quantity just does not change, regardless of changes in price. This characterization of elasticity is most important for the price elasticity of demand and the price elasticity of supply. Perfectly inelastic is one of five elasticity alternatives. The other four are perfectly elastic, relatively elastic, relatively inelastic, and unit elastic. | Alternative | Coefficient (E) | | Perfectly Elastic | E = ∞ | | Relatively Elastic | 1 < E < ∞ | | Unit Elastic | E = 1 | | Relatively Inelastic | 0 < E < 1 | | Perfectly Inelastic | E = 0 |
Perfectly inelastic means that quantity demanded or supplied is unaffected by any change in price. In other words, the quantity is essentially fixed. It does not matter how much price changes, quantity does not budge. Perfectly inelastic demand occurs when buyers have no choice in the consumption of a good. In an analogous way, perfectly inelastic supply occurs when sellers have no choice in the production of a good.The chart to the right displays the five alternatives based on the coefficient of elasticity (E). In technical shorthand (often used by economists who never learned technical longhand), the coefficient of elasticity (E) is given as: E = 0 This technical shorthand works for both the price elasticity of demand and the price elasticity of supply. Two Curves| Perfectly Inelastic Curves |  |
Perfectly inelastic demand and supply are best understood and more easily seen with pictures. The blank graph presented here is ready and willing to display a perfectly inelastic demand curve and a perfectly inelastic supply curve. All that is needed is a click of the corresponding buttons labeled [Demand] and [Supply].Both of the curves revealed by the button-clicking are vertical, perfectly vertical. This is THE hallmark characteristic of perfectly inelastic. Being perfectly vertical means that, for a given quantity, buyers buy or sellers sell at any price. The focus, in other words, of a perfectly inelastic curve is on quantity not price. For any price the quantity remains absolutely fixed. How about a couple of examples to illustrate perfectly inelastic demand and perfectly inelastic supply? However, before providing examples, note that use of the word "perfectly" means that the perfectly inelastic alternative is an ideal, theoretical extreme that does NOT actually exist in the real world. As such, the hypothetical, fabricated examples provided here are intended only to illustrate. DemandThe key for perfectly inelastic demand is that the good has absolutely no substitutes-in-consumption. Buyers either buy the good, or they do not buy the good. They CANNOT switch to a substitute good if the price gets a little too high. The hypothetical, fabricated example offered for purposes of illustration is Double-Dot Caramel Nougat Clusters. But this is just candy, with thousands of substitutes. How can it have a perfectly inelastic demand?A ha! There is a trick to this candy. And that trick is the secret ingredient treplobivium HG9. Every Double-Dot Caramel Nougat Cluster contains an ample amount of treplobivium HG9, which not only enhances the flavor of each Caramel Nougat Cluster, but is also THE most addictive substance known to humanity. One taste of treplobivium HG9 and a consumer is hooked for life. Eat it and live. Do not eat and die. Double-Dot Caramel Nougat Clusters are THE ONLY source of treplobivium HG9. This means Double-Dot Caramel Nougat Clusters have NO substitutes-in-consumption. Period! As such, the demand for Double-Dot Caramel Nougat Clusters is perfectly inelastic. The Double-Dot company can charge any price it wants for Caramel Nougat Clusters, and buyers pay because they have no choice. Raise the price, lower the price, it matters not, the addicted buyers continue to buy. If this sound a lot like illegal narcotics, cigarettes, and alcohol, it should? While these goods do not have perfectly inelastic demand, their addictiveness and lack of substitutes does indicate that they come as close to perfectly inelastic demand as almost any real world goods. SupplyThe key for perfectly elastic supply is that the good has absolutely no substitutes-in-production. In particular, the quantity of the good is fixed. It is not possible to switch resources back and forth between the production of any other goods. Typically this good has been produced already and there is no way to produce any more. In this case, production cost and thus price do not affect quantity. One hypothetical example of perfectly inelastic supply is the macrame tapestries created by the now deceased artist Katerina Kopolov (who was struck dead by a meteor at the age of 26). Katerina created three works of art in total, one depicting the biblical Last Supper, another depicting the last voyage of Columbus, and the third depicting the last television episode of M*A*S*H. Because Katerina is no longer among the living, the quantity of these macrame tapestries is fixed. Production cost and price cannot affect quantity. Quantity is fixed.As such, the supply of Katerina Kopolov macrame tapestries is perfectly inelastic. Buyers can offer one dollar or one billion dollars, and it does not matter, only three Katerina Kopolov macrame tapestries exist. If buyers should lower the price they offer for Katerina Kopolov macrame tapestries, then three Katerina Kopolov macrame tapestries are supplied. If buyers should raise the price they offer for Katerina Kopolov macrame tapestries, then three Katerina Kopolov macrame tapestries are supplied.
Recommended Citation:PERFECTLY INELASTIC, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: October 4, 2023].
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Today, you are likely to spend a great deal of time at an auction hoping to buy either a flower arrangement with a lot of roses for your grandmother or a wall poster commemorating the first day of winter. Be on the lookout for gnomes hiding in cypress trees.
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Woodrow Wilson's portrait adorned the $100,000 bill that was removed from circulation in 1929. Woodrow Wilson was removed from circulation in 1924.
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"Those who are blessed with the most talent don't necessarily outperform everyone else. It's the people with follow-through who excel. " -- Mary Kay Ash, May Kay Cosmetics founder
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NNP
Net National Product
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