ECONOMICS

CLASS
Elasticity
Definition
 Elasticity a measure of the responsiveness of quantity demanded or quantity supplied to a change in one
of its determinants.
price elasticity of demand a measure of how much the quantity demanded of a good responds to a
change in the price of that good, computed as the percentage change in quantity demanded divided by the
percentage change in price.
price elasticity of demand, Ep, as

Ep= (%ΔQ)/(%ΔP)
 Price Elasticity of Demand As Follows
Different Types of Price Elasticity of Demand
a) Perfectly Inelastic: There is no change in demand due change in
price. Ep= 0

b) Inelastic Demand: If % change in demand is smaller than % change

in price, demand is inelastic. Ep

c) Unitary/ Unit Elastic Demand: If % change in quantity of demand is

equal to the % change in price, demand is unitary elastic.
Different Types of Price Elasticity of Demand
d. Elastic Demand: If % change in demand is greater than % change in
price, demand is elastic.
e. Perfectly Elastic Demand: If demand change without any change in
demand, demand is perfectly elastic.

Ep= ∞