Livestock Economics, Marketing and Business Management

MAGNITUDE OF ELASTICITY

• On the basis of numerical value five types of elasticity of demand can be distinguished.
  • Elastic Demand: When the coefficient of elasticity of demand exceeds one, the demand is elastic. The percentage change in quantity demanded is more than that of the price. (Click to view graph)
  • Inelastic demand: When the coefficient of elasticity of demand is less than one the demand is called inelastic. The percentage change in quantity demanded is less than that of price. (Click to view graph)
  • Unitary elastic demand: When the coefficient of elasticity of demand is equal to one the demand is said to be unitary elastic. That is percentage change in quantity demanded is equal to that of price. (Click to view graph)
  • Perfectly elastic demand: When the coefficient of elasticity of demand is infinite the demand is said to be perfectly elastic. i.e. when the quantity demanded changes even when the price level remains static, the demand is said to be perfectly elastic. (Click to view graph)
  • Perfectly inelastic demand: When the coefficient of elasticity of demand is zero, the demand is said to be perfectly inelastic. When the change in price does not result in change in quantity demanded, the demand is said to be perfectly inelastic. (Click to view graph)