Types/Degree of Price Elasticity of Demand – Elasticity | Microeconomics

Types/Degree of Price Elasticity of Demand
Elasticity | Microeconomics
BBA | BBA-BI | BBA-TT | BCIS
Management Notes

The elasticity of demand is the measure of responsiveness of demand for a commodity to the change in any of its determinants like price of the same commodity,price of the related commodity,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)

  1. Perfectly elastic demanded(Ep=infinity): Demand is said to be perfectly elastic, if negligible change in price leads to infinite change in the quantity demanded.It is hardly found in real life situation.
  2. 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 case of medicine and salts demand is not affected by the change in its price.
  3. Relatively elastic demand(Ep>1): Demand is said to be relatively elastic, if percentage change in quantity demanded for a commodity is more than the percentage change in its price. For example: In case of luxurious goods(like LED,Car,etc.)
  4. Relatively inelastic demand(Ep<1):Demand is said to be relatively inelastic, if percentage change in quantity demanded for a commodity is less than the percentage change in its price.For example: In case of necessity or basic goods( Like rice,vegetables,etc.)
  5. Unitary elastic demand(Ep=1): Demand is said to be unitary elastic, if percentage change in quantity demanded for a commodity is equal to the percentage change in its price.

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