ELASTICITY OF DEMAND - ECONOMICS

Elasticity of Demand

Elasticity of demand can be defined as the degree of responsiveness of
quantity demanded to little changes in the price of a commodity, or to change
in the income or taste of the consumer, or to change in the prices of other
commodities.



Price Elasticity of Demand

Price elasticity of demand refers to the degree of responsiveness of demand
to little changes in prices of goods and services.



Types of Price Elasticity

1. Elastic demand: Demand is elastic if a little change in price brings about
a greater change in the quantity of a commodity demanded.( Graph B)




Elastic or fairly Elastic Demand curve.
2. Inelastic Demand: Demand is inelastic if a larger or small change in
price of commodities leads to little or no change in the quantity (Graph

, C) demanded.




3. Unity or Unitary Elasticity of Demand: Demand is unitary if a change in
price leads to an equal change in the quantity of goods demanded.
(Graph A)




4. Perfectly Elastic Demand: In this curve any slight increase in price will
make consumers stop buying the commodity at all, while a slight
decrease in price will make the consumers purchase all the quantity of