Degrees of Price Elasticity of Demand


Elastic: elastic demand is where PED is greater than 1. Elastic demand signifies that for a small change in price there will be more than proportionate change in quantity demanded. [Price sensitive products] An elastic demand curve will be more horizontal and flat in shape and more steeper to the quantity demanded side. 


   Inelastic: inelastic demand is where PED is less than 1. Inelastic demand refers that a large change in price causes only a small change in quantity demanded. [Price insensitive products]. An inelastic demand curve is more vertical and steeper to the price line. The following diagram shows an inelastic demand curve.
 

 Imaginary situations of Price Elasticity of demand
Other than Elastic and Inelastic demand there are Imaginary   or Exceptional situation – They are practically impossible and only Theoretical Situations and they are as follows.
Unit elastic: Unit elastic is where the PED is equal to one. [= 1] When PED is unit elastic, change in quantity demanded will be equal to change in price.


Perfectly elastic: Perfectly elastic demand is where price elasticity of demand is equal to infinity [Any number/Zero=infinity]. When the PED is perfectly elastic, the buyers will buy at the current market price, but if the price is increased no one will buy that good, therefore the quantity demanded will fall to zero. The curve for perfectly elastic demand curve will be fully horizontal. It is shown by the below diagram.


 
Perfectly inelastic: Perfectly inelastic demand is where PED is equal to zero [Zero/any number = 0].  Any change in price will have no impact on the quantity demanded.



 



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