Types of Price Elasticity of Demand | Elasticity | Microeconomics | BBA | BBA-BI | BBA-TT | BCIS | Management Notes
The elasticity of demand is the measure of the responsiveness of demand for a commodity to the change in any of its determinants like the price of the same commodity, price of the related commodity, the income of the consumer, etc.
The various types of price elasticity of demand are as follows:
- Perfectly elastic demanded(Ep=infinity)
- Perfectly inelastic demand(Ep=0)
- Relatively elastic demand(Ep>1)
- Relatively inelastic demand(Ep<1)
- Unitary elastic demand(Ep=1)
Types of Price Elasticity of Demand
Perfectly elastic demanded(Ep=infinity)
Demand is said to be perfectly elastic if a negligible change in price leads to an infinite change in the quantity demanded. It is hardly found in real-life situations.
Perfectly inelastic demand(Ep=0)
Demand is said to be perfectly inelastic if demand for a commodity does not change with the change in its price. For example: In the case of medicine and salts demand is not affected by the change in its price.
Relatively elastic demand(Ep>1)
Demand is said to be relatively elastic if the percentage change in quantity demanded a commodity is more than the percentage change in its price. For example: In the case of luxurious goods(like LED, Car,etc.)
Relatively inelastic demand(Ep<1)
Demand is said to be relatively inelastic if the percentage change in quantity demanded a commodity is less than the percentage change in its price. For example: In case of necessity or basic goods( Like rice, vegetables,etc.)
Unitary elastic demand(Ep=1)
Demand is said to be unitary elastic if the percentage change in quantity demanded a commodity is equal to the percentage change in its price.
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