Measuring the Price Elasticity of Demand

What is price elasticity?

1. A measure of the responsiveness of the quantity demanded and supplied to a change in price 2. It is equal to the percentage change in quantity demanded divided by the percentage change in price

Unit elastic demand

1. Coefficient of the price elasticity calculation is equal to 1 2. Demand is said to be unit elastic 3. Occurs when a percentage change in price is identical with the percentage change in demand

Price elastic demand

1. Coefficient of the price elasticity calculation is greater than 1 2. Demand is said to be elastic 3. Occurs when a large percentage figure of change in demand is divided by a small percentage figure of change in price

Price inelastic demand

1. Coefficient of the price elasticity calculation is less than 1 2. Demand is said to be inelastic 3. Occurs when a small percentage figure of change in demand is divided by a large percentage figure of change in price

Perfectly elastic

1. Price has no change regardless of quantity 2. Demand is said to be perfectly elastic 3. A THEORETICAL EXTREMES

Types of price elasticity of demand

1. Price inelastic demand 2. Price elastic demand 3. Unit-elastic demand 4. Perfectly elastic demand 5. Perfectly inelastic demand