Question

explain elastic demand , inelastic demand and unit elastic demand with curve and example for each

Answer 1

Elastic demand: A product is said to have elastic demand when the quantity of a product responds intensively to a change in the price of that product. In other words , elastic demand means consumer demand is more likely to change as the price of goods and services change.

According to law of demand , when price of a product rises, quantity demanded declines because people are not willing to spend more on a particular product. Likewise when the price of a product declines ,the quantity demanded rises as people save money on that product. However,the change is not same for all products . when a product responds highly to a change in the price,demand is said to be elastic

For example, John wants to buy a suit ,he goes to a well established retailer,where he buys clothes .There,he finds out that the suits are on sale.he would normally spend $100 for one suit,but if he spends $125,he can buy two suits. Although he doesn't really need a second suit ,he considers this a bargain and he buys two suits.

Elastic Demand Curve​

demanded Quantity + - - Price

lnelastic demand : inelastic demand is when people buy about the same amount whether the price drops or rises.In other words inelastic demand is when there is no change produced in the demand of a product with change in its price This happens with things people must have ie basic necessities like petrol, gasoline etc

For example :

Petrol : those with cars will need to buy petrol at any cost to get to work

Salt: no close substitute

Inelastic Demand Curve:

Price 4 I demand Quantity

Unit Elastic Demand: Unit Elastic Demand is when a change in price will cause an equal proportional change in quantity demanded. Put simply unitary elastic Demand is perfectly responsive to price changes by the same percentage.

For example: if sandy raises the price of her famous oatmeal raisin cookies by $1 ,if this result in decrease in the quantity demanded by one unit ,then it is called unit Elastic Demand

Unit Elastic Demand Curve:

Price O Quantity demanded