Price Elasticity is a measure of change in demand as compared to the subsequent change in price. It is a measure of proportionate change in the quantity demanded of a commodity in response to a proportionate change in price. While calculating price elasticity no other factors are considered. It can be represented in formula form.
Elasticity of demand may be of the following types:
Unitary Elastic Demand (Elasticity is equal to 1): In unitary elastic demand proportionate change in price of a commodity and the proportionate change in demand are equal.
The percentage change in demand and percentage change in price are equal in this case.
Relatively Elastic Demand (Price Elasticity is greater than 1): In relatively elastic demand percentage in demand is more than a relative percentage change in price.
The percentage change in demand is more than percentage change in price in this case.
Relatively Inelastic Demand (Price Elasticity is less than 1): In relatively inelastic demand percentage in demand is less than a relative percentage change in price.
The percentage change in demand is less than percentage change in price in this case.
Perfectly Elastic Demand ( Price Elasticity is equal to infinity) : In Perfectly Elastic demand there is increase or decrease in demand of a commodity with no change in price.
In unitary elastic demand proportionate change in price of a commodity and the proportionate change in demand are equal.
There is change in demand with no change in price in this case.
Perfectly Inelastic Demand ( Price Elasticity is equal to zero) : In Perfectly inelastic demand there is no change in demand of a commodity with increase or decrease in price of a commodity.
There is no change in demand with change in price in this case.
Economics for Beginners 