Answer to Question #85930 in Microeconomics for Thandeka Ndwandwe

Question

Critically discuss elastic,inelastic and unnitary condition/ forms of price elasticity of demand through the use of pratical examples and graphs

Answer 1

Relatively elastic demand refers to the demand when the proportionate change produced in demand is greater than the proportionate change in price of a product. The numerical value of relatively elastic demand ranges between one to infinity (Ep > 1).

Relatively inelastic demand is one when the percentage change produced in demand is less than the percentage change in the price of a product. For example, if the price of a product increases by 30% and the demand for the product decreases only by 10%, then the demand would be called relatively inelastic. The numerical value of relatively elastic demand ranges between zero to one (Ep<1).

When the proportionate change in demand produces the same change in the price of the product, the demand is referred as unitary elastic demand. The numerical value for unitary elastic demand is equal to one (Ep=1).

Source:

http://www.economicsdiscussion.net/elasticity-of-demand/5-types-of-price-elasticity-of-demand-explained/3509