Inelastic, Elastic, and Unitary Price Elasticity Implication
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1. Define and explain the differences among inelastic, elastic, and unitary price elasticity.
2. What questions would you ask regarding each?
3. What recommendations would you have?
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This posting gives you a step-by-step explanation of Price Elasticity. The response also contains the sources used.
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1. Define and explain the differences among inelastic, elastic, and unitary price elasticity.
Elasticity of demand shows the responsiveness of the quantity demanded of a good to a variation in price. The price elasticity is termed 'elastic' when the percent change in quantity demanded is greater than the percent change in price. The price elasticity is termed 'inelastic' when the percent change in quantity demanded is less than the percent change in price. Finally, the price elasticity is termed 'unitary' when the percent change in quantity demanded is equal to the percent change in price.
2. What questions would you ask regarding each?
When there is unitary elasticity, I would ask the question: what is the change is ...
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