Price elasticity of demand

Here is a table summarizing the cases of price elasticity of demand:

Elasticity Case Description
Coefficient
(e_p)
e_p > 1 Elastic Demand A relative change in price leads to a greater relative change in
quantity demanded. Demand is sensitive to price changes.

e_p = 1 Unit Elastic Demand A relative change in price leads to an equal relative change in
quantity demanded.

e_p < 1 Inelastic Demand A relative change in price leads to a smaller relative change in
quantity demanded. Demand is not sensitive to price changes.

e_p = 0 Perfectly Inelastic Price changes do not affect the quantity demanded.
Demand

e_p = ∞ Perfectly Elastic Demand A very small change in price leads to an extremely large
(infinite) change in quantity demanded.

This table shows the relationship between price changes and changes in quantity demanded and is used in
economic analysis to understand how consumers react to changes in the prices of goods and services.

Examples:
1. If the quantity demanded changes from 100 units to 105 units due to a price change from 10 to 9,
calculate the price elasticity of demand.
2. If the quantity demanded changes from 50 units to 45 units due to a price change from 20 to 22,
calculate the price elasticity of demand.
3. If the quantity demanded changes from 150 units to 180 units due to a price change from 30 to
25, calculate the price elasticity of demand.
4. If the quantity demanded changes from 200 units to 190 units due to a price change from 50 to
52, calculate the price elasticity of demand.

P Qd
10 50
5 75