Question

What is the price elasticity of demand

Answer 1

Price elasticity of demand may be defined as the responsiveness of demand after a change in the price of a product. It measures the change in the demand with a change in the price of a product.

It is a very important term for any businessman.

The o-efficient of elasticity of demand is: Percentage change in quantity demanded divided by the percentage change in price

There are basically 5 types of price elasticity of demand. These are

1. Perfectly Elastic Demand:

When there is huge or major change in the demand of a product with a small change in the price, then it is called perfectly elastic demand.

2. Perfectly Inelastic Demand:

When there is no change in the demand with a change in he price of the product, then it is called perfectly inelastic demand.

3. Relatively Elastic Demand:

when in change is demand is larger than the change in the price than it is called as relatively elastic demand.

4. Relatively Inelastic Demand:

When the change in the demand is less than the change in the price, then it is called as relatively inelastic demand.

5. Unitary Elastic Demand:

When the proportionate change in the demand is equal to the change in the price of a product then it is called as unitary elastic demand.