Question

Critically discuss elastic, inelastic and unitary conditions/forms of price elasticity of demand through the use of practical examples and graphs...it's 45 marks

Answer 1

Elastic demand (Ed > 1) is the one when the response of demand is greater with a small proportionate change in the price. The demand for such goods as different electronic devices is elastic. On the other hand, inelastic demand (Ed < 1) is the one when there is relatively a less change in the demand with a greater change in the price. Usually demand for the goods of first need, like bread, vegetables, meat is inelastic. Unitary elatic demand (Ed = 1) is the one when the response of demand is the same as proportionate change in the price.