The demand curve changes as the price varies which we know. Now the demand curves are been classified into five types based on their elasticity of change.
1. Perfectly inelastic demand:
In this the demand of the product will not change, though the prices increased and proportionally will not have any effect in the elasticity. In this case the elasticity will be zero
2. Inelastic demand:
In this curves there will be elasticity less than one since the price increases and the demand decreases, but not zero.
3. Unit elastic demand:
This could be explained well with an example, let us assume that a ice cream shop increases the price of a ice cream by 10 % and at the same time the demand of the product also reduces by 10% this is called unit elastic demand. Here the elasticity will be equal to 1.
4. Elastic demand:
Here then the price of the product increases and the demand decreases and the elasticity value will be greater than one. This means that that that reduction in demand percentage is greater than the increase in price percentage. Obviously hear the value of elasticity will be greater than 1.
5. Perfectly elastic demand:
Here in this case the demand of the product will be zero if the price increases, if the prices are being stable then the demand quantity will be high and if the price decreases futher the more then the demand will be infinite.
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