Question

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Explain the types of price elasticity of demand.
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Answer 1

In Microeconomics,price elasticity of demand is defined as the responsiveness or sensitivity of the consumer demand for any good or service in response to any particular percentage or proportion of change in its price in the market.

Explanation:

Types of price elasticity of demand:-

1. Perfectly elastic demand:Perfect elasticity of demand implies that consumers of buyers are extremely responsiveness or sensitive about even the slightest price change of any product or service in the market.Even a very small percentage change in price of any commodity or service will cause an infinite or extremely huge change in the consumer or buyer demand level.The value of perfectly elastic demand is infinity.
2. Relatively elastic demand:Relatively elastic demand indicates that any particular percentage change in the consumer or buyer demand for any good or services is greater than the respective percentage change in its market price.The value of relatively elastic demand varies is greater than 1.
3. Unitary elastic demand:When the percentage or proportionate change in quantity demanded of any product or service by the consumers or buyers is exactly equal or identical to the percentage or proportionate change in its price level,the product or service is unitary elastic.The mathematical value of unitary elastic demand is equal to 1.
4. Perfectly inelastic demand:Perfectly inelastic demand basically indicates that consumers or buyers in the market is completely unresponsive or insensitive about any price change of the concerned good or service.In other words,the percentage or proportionate change in quantity demanded for any good or service is absolutely zero in response to any percentage or proportionate change in its price in the market.The value of perfectly inelastic demand is always 0.
5. Relatively inelastic demand:Relatively inelastic demand implies that the percentage change in quantity demanded of any commodity or services is less than the percentage or proportionate change in its price in the market.The value of relatively inelastic demand is less than 1.