Question

Explain types of elasticity of demand. Answer only if you know.​

Answer 1

Explanation:

5 Types of Price Elasticity of Demand – Explained!

Perfectly Elastic Demand: When a small change in price of a product causes a major change in its demand, it is said to be perfectly elastic demand. ...

Perfectly Inelastic Demand: ...

Relatively Elastic Demand: ...

Relatively Inelastic Demand: ...

Unitary Elastic Demand:

Answer 2

Answer:

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1. Perfectly Elastic Demand:

When a small change in price of a product causes a major change in its demand, it is said to be perfectly elastic demand. In perfectly elastic demand, a small rise in price results in fall in demand to zero, while a small fall in price causes increase in demand to infinity. In such a case, the demand is perfectly elastic or ep = 00.

The degree of elasticity of demand helps in defining the shape and slope of a demand curve. Therefore, the elasticity of demand can be determined by the slope of the demand curve. Flatter the slope of the demand curve, higher the elasticity of demand.

In perfectly elastic demand, the demand curve is represented as a horizontal straight line.

2. Perfectly Inelastic Demand:

A perfectly inelastic demand is one when there is no change produced in the demand of a product with change in its price. The numerical value for perfectly inelastic demand is zero (ep=0).

In case of perfectly inelastic demand, demand curve is represented as a straight vertical line.

3. Relatively Elastic Demand:

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.

Mathematically, relatively elastic demand is known as more than unit elastic demand (ep>1). For example, if the price of a product increases by 20% and the demand of the product decreases by 25%, then the demand would be relatively elastic.

The demand curve of relatively elastic demand is gradually sloping.

4. Relatively Inelastic Demand:

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). Marshall has termed relatively inelastic demand as elasticity being less than unity.

The demand curve of relatively inelastic demand is rapidly sloping.

5. Unitary Elastic Demand:

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).

The demand curve for unitary elastic demand is represented as a rectangular hyperbola