Types of Price Elasticity of Demand

Price Elasticity of demand can be defined as a measure of change in quantity demanded to the corresponding change in price. Below are the various types of elasticity of demand –

1. Elastic Demand – If the change in price leads to greater change than proportional change in demand then the demand for that good is price elastic. For example a 20% fall in price leads to a 30% increase in quantity demanded.

2. Inelastic Demand – If the change in price leads to less than proportional change in demand then the demand for that good is price inelastic. For example a 30% increase in price leads to a 15% fall in quantity demanded.

3. Unitary Demand – – If the change in price leads to equal change in demand then the demand for that good is unitary. For example a 10% increase in price leads to 10% decrease in demand.

4. Perfectly Elastic Demand – It refers to a situation when any change in price will see quantity demanded fall to zero.

5. Perfectly Inelastic Demand – It refers to a situation when any change in price will not affect the demand for a good that is quantity demanded will remain unchanged irrespective of change in the price of that good.

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8 comments

  1. if this is true then where would we apply this theory in real life

    • We see this in real life daily, if there are 2 multiplex in your town and 1 multiplex increases the price of tickets and other multiplex doesn’t then you will go to that multiplex which has not increased the price of tickets even if it is far away from your home, this was an example of Elastic Demand.
      An example of Inelastic Demand would be when the price of petrol rise then you do not stop driving the vehicle , you would still need petrol because it is absolutely necessary.

  2. May i know from tis site that what is elasticity of demand and whats various types of this and degress?

  3. Abibullahi Hamzat

    How many types of price elasticity of demand do we have

  4. Can u give me the example of unit elastic demand, perfectly elastic demand, perfectly inelastic demand in our real life or not? Thank you.

  5. The case of Unitary Elastic Demand appears as a ‘ Happy Accident. In this case, demand curve is neither flatter nor steeper.

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