Types of Elasticity

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Goods have a unitary elastic demand when a percentage change in the demand for the good is equal to the percentage change in the price of the good

A good with a unitary elastic demand would have an elasticity coefficient of exactly 1

Types of Elasticity

There are 4 main types of elasticity that we will focus on;

Perfectly elastic demand

Perfectly inelastic demand

Elastic demand

Unitary elastic demand

Perfectly Elastic Demand

This happens when consumers' demand for a product is infinite.

They will buy as much as they can of a product at a fixed price.

If there is any increase in the price, however, the quantity demanded will fall to zero.

The demand curve for such a PED would be perfectly horizontal.

Such a PED would occur in a perfectly competitive market

Perfectly Inelastic Demand

This happens when a change in the price of a good will cause no change in the quantity demanded

An example of such demand would be with essential life saving medicine - it will be bought regardless of the cost

Elastic Demand

Goods have an elastic demand when the percentage change in the demand for the good is greater than the percentage in the price of good

As said before, a good has elastic demand when it has an elasticity coefficient of above 1

Unitary Elastic Demand

Types of Elasticity