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Calculating the Price Elasticity of DemandIf . . .
Then . . .
And It Is Called . . .
\(\%\,change\,in\,quantity\,\gt\,\%\,change\,in\,price\)
\(\dfrac{ \%\,change\,in\,quantity }{ \%\,change\,in\,price}\,\gt\,1\)
Elastic
\(\%\,change\,in\,quantity\,=\,\%\,change\,in\,price\)
\(\dfrac{ \%\,change\,in\,quantity }{ \%\,change\,in\,price}\,=\,1\)
Unitary
\(\%\,change\,in\,quantity\,\lt\,\%\,change\,in\,price\)
\(\dfrac{ \%\,change\,in\,quantity }{ \%\,change\,in\,price}\,\lt\,1\)
Inelastic
Price Elasticity of Supply
elastic demandwhen the elasticity of demand is greater than one, indicating a high responsiveness of quantity demanded or supplied to changes in priceelastic supplywhen the elasticity of either supply is greater than one, indicating a high responsiveness of quantity demanded or supplied to changes in priceelasticityan economics concept that measures responsiveness of one variable to changes in another variableinelastic demandwhen the elasticity of demand is less than one, indicating that a 1 percent increase in price paid by the consumer leads to less than a 1 percent change in purchases (and vice versa); this indicates a low responsiveness by consumers to price changesinelastic supplywhen the elasticity of supply is less than one, indicating that a 1 percent increase in price paid to the firm will result in a less than 1 percent increase in production by the firm; this indicates a low responsiveness of the firm to price increases (and vice versa if prices drop)price elasticitythe relationship between the percent change in price resulting in a corresponding percentage change in the quantity demanded or suppliedprice elasticity of demandpercentage change in the quantity demanded of a good or service divided the percentage change in priceprice elasticity of supplypercentage change in the quantity supplied divided by the percentage change in priceunitary elasticitywhen the calculated elasticity is equal to one indicating that a change in the price of the good or service results in a proportional change in the quantity demanded or supplied