{"id":3247,"date":"2021-07-03T14:00:38","date_gmt":"2021-07-03T08:30:38","guid":{"rendered":"https:\/\/www.goseeko.com\/blog\/?p=3247"},"modified":"2021-10-30T07:39:55","modified_gmt":"2021-10-30T07:39:55","slug":"what-is-price-elasticity-of-demand","status":"publish","type":"post","link":"https:\/\/www.goseeko.com\/blog\/what-is-price-elasticity-of-demand\/","title":{"rendered":"What is Price Elasticity of Demand?"},"content":{"rendered":"\n<p>The price of elasticity demand is defined as the change in the quantity demanded to the change in the price of the commodity<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Formula<\/h4>\n\n\n\n<p>Price elasticity of demand (Ep) = percentage change in quantity demanded\/percentage change in price<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">Types <\/h4>\n\n\n\n<h5 class=\"wp-block-heading\">Perfectly elastic demand<\/h5>\n\n\n\n<p>A small change in price results to major change in demand is said to be perfectly elastic demand. The demand curve in perfectly elastic demand represent horizontal straight line<\/p>\n\n\n\n<p>Ep = infinity<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh5.googleusercontent.com\/4spi6FZbERUA6s9QQAl6xQ3Xfm-C-EcDFYFFZLCSsy5hTeq8ouQB3Z_s_DFS8WLjXHmBA-8kxF_AmGqW-CmCVJD4vrr4y1jVVFQ6BFzl_uBCao3sBZvFjEK57U7RzjlEZAeMg9W0\" alt=\"\"\/><\/figure>\n\n\n\n<p>From the above figure, we can see at price P1 consumers are ready to buy as much quantity as they want. A slight increase in price may result to fall in demand to zero.<\/p>\n\n\n\n<figure class=\"wp-block-embed-youtube wp-block-embed is-type-video is-provider-youtube wp-embed-aspect-4-3 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<iframe loading=\"lazy\" title=\"Elasticity of Demand (Hindi)\" width=\"1170\" height=\"878\" src=\"https:\/\/www.youtube.com\/embed\/L0dKo0BCSew?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture\" allowfullscreen><\/iframe>\n<\/div><\/figure>\n\n\n\n<h5 class=\"wp-block-heading\">Perfectly inelastic demand<\/h5>\n\n\n\n<p>When there is no change in the demand of the commodity with the change in price is said to be perfectly inelastic demand. The demand curve in perfectly elastic demand represent Vertical straight line.&nbsp;<\/p>\n\n\n\n<p>Ep = zero<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/nzdfSTHuGFA0LWCmpBneYGKDU5h6gVBgaaPdduxhnHpy_o5xdtfJ_JEXyKPmhIbyW8ndllO0qTxqW9yDGQ858EQDDY0JHoRXyriPsR_ntSREkoDduwb3CqQdmF8btteD9ceF3GAF\" alt=\"\"\/><\/figure>\n\n\n\n<p>From the above fig, we can see that price is rising from P1 to P2 to P3, but there is no change in the demand. This cannot happen in practical situation. But, in essential goods such as salt, with the change in price the demand does not change.<\/p>\n\n\n\n<h5 class=\"wp-block-heading\">Relatively elastic demand <\/h5>\n\n\n\n<p>When the proportionate change in demand is greater than the proportionate change in price of a product. The value ranges between one to infinity (ep&gt;1). Ex \u2013 a smaller change in flight price result in more demand for booking the flight tickets.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh6.googleusercontent.com\/Zn5Idj4kGsPu7IbaRRzs3LO1bxa79z0ZsR105gP7-NG3_52_UIhznzOQ-Olw1RvLJA_iri71bFJ9TeZ6_746OcxU2-A9QRbtin7639sUJx5OXUU0tD1y2_JlvxWaiDGGsnh_4cc1\" alt=\"\"\/><\/figure>\n\n\n\n<p>In the above figure we can observed that the percentage change in demand from Q2 to Q1 is larger than the percentage change in price from P2 to P1. Thus the demand curve is gradually sloping downwards<\/p>\n\n\n\n<p>4. Relatively inelastic demand &#8211; When the percentage change in demand is less than the percentage change in price. The value ranges between zero to one (ep&lt;1). Ex \u2013 cloths, drinks, food, oil , as the change in price does not affect the quantity demanded.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh5.googleusercontent.com\/IiOUXD-BVrhDnGlPxqbe8G5Mhi3GN7odFeK-q6IpiWcTuEna5dTKi7DW9ktnPJUSrrtYXepfvkauiYgRBlqBaRM6kjWOX17X8YlNJvs1OcEkrPEgNor_TKbn8dTp_7MfbFeBlbzX\" alt=\"\"\/><\/figure>\n\n\n\n<p>In the above figure we can observe that the proportionate change in demand from Q2 to Q1 is less than the proportionate change in price from P2 to P1. Thus the demand cure rapidly sloping down.&nbsp;<\/p>\n\n\n\n<p>5. Unitary elastic demand &#8211; When the percentage change in quantity demanded in equal to the percentage change in price of the commodity. The value is equal to one (ep=1).<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/lh3.googleusercontent.com\/WLSkoKi1s2-nkhm0gYvSVNr2gWgip8r1HwPZPwHFXJP6Fkx3XYyWubJP_p34ZxiPSkYswKi5YQLO3g2Fki1_wvBjFM1MYoLr1eFFKKCrTkpoVldyGCPBSAxIHeG_Bm-kb9XuwtYY\" alt=\"\"\/><\/figure>\n\n\n\n<p>In the above figure we can observe that proportionate change in price from P to P1 cause the same proportionate change in price from M to M1<\/p>\n\n\n\n<p>Interested in learning about similar topics? Here are a few hand picked blogs for you &#8211;<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><a href=\"https:\/\/www.goseeko.com\/blog\/what-is-monopolistic-competition\">What is Monopolistic Competition?<\/a><\/li><li><a href=\"https:\/\/www.goseeko.com\/blog\/index.php\/2021\/05\/31\/what-is-demand\/\">What is Demand?<\/a><\/li><\/ul>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The price of elasticity demand is defined as the change in the quantity demanded to the change in the price of the commodity<\/p>\n","protected":false},"author":3,"featured_media":3091,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[27],"tags":[],"class_list":["post-3247","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commerce"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.3.1 - 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