What are the five types of elasticity’s of demand?

The degree of responsiveness of quantity demanded of a commodity to the change in price is called elasticity of demand. price elasticity of demand is popularly called elasticity of demand. It is the rate of which quantity demanded changes in response to the change in price. Elasticity of demand expresses the magnitude of change in quantity of a commodity.

Precisely stated, price elasticity demand is defined as the ratio of percentage change in quantity demanded to a percentage change in price. Thus elasticity of demand can be expressed in form of the following as price and quantity demanded move opposite.

Five cases of Elasticity of Demand:

1. Perfectly elastic demand

2. Perfectly inelastic demand

3. Relatively elastic demand

4. Relatively inelastic demand

5. Unitary elastic demand

1. Perfectly elastic demand:

The demand is said to be perfectly .elastic when a very insignificant change in price leads to an infinite change in quantity demanded. A very small fall in price causes demand to rise infinitely. Likewise a very insignificant rise in price reduces the demand to zero. This case is theoretical which is never found in real life.

2. Perfectly inelastic demand:

The demand is said to be perfectly inelastic when a change in price produces no change in the quantity demanded of a commodity. In such a case quantity demanded remains constant regardless of change in price. The amount demanded is totally unresponsive of change in price. The elasticity of demand is said to be zero.

3. Relatively more elastic demand:

The demand is relatively more elastic when a small change in price causes a greater change in quantity demanded. In such a case a proportionate change in price of a commodity causes more than proportionate change in quantity demanded. If price changes by 10% the quantity demanded of the commodity change by more than 10% i.e. 25%. The demand curve in such a situation is relatively flatter.

4. Relatively inelastic demand:

It is a situation where a greater change in price leads to smaller change in quantity demanded. The demand is said to be relatively inelastic when a proportionate change in price is greater than the proportionate change in quantity demanded. For example If price falls by 20% quantity demanded rises by less than 20% i.e 15%.

5. Unitary elastic demand:

The demand is said to be unit when a change in price produces exactly the same percentage change in the quantity demanded of a commodity. In such a situation the percentage change in both the price and quantity demanded is the same. For example if the price falls by 25% the quantity demanded rises by the same 25%. It takes the shape of a rectangular hyperbola. Numerically elasticity of demand is said to be equal to 1.(ed = 1).