How many types of elasticities of demand do we have?

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gsenviro eNotes educator| Certified Educator

Elasticity of demand refers to sensitivity of demand to price change. Mathematically it is the ratio of % change in quantity demanded to % change in the commodity's price. There are, generally, 5 types of elasticity of demand:

  • Elastic: refers to a situation when slight change in price may affect the demand significantly. 
  • Inelastic: a situation where change in price will have relatively little effect on demand
  • Perfectly Elastic: situation where a small change in price can change the demand to 0 or infinity. In a perfectly elastic demand scenario, small increase in price causes demand to fall to 0, while a small fall in price will cause the demand to go to infinity.
  • Perfectly inelastic: In a perfectly inelastic scenario, no change in price level will bring any change in demand. In other words, whatever maybe the price, quantity demanded will always be the same. 
  • Unit elasticity: A unit change in price will cause a unit change in demand. or example, a 2% price increase will result in 2 % decrease in demand.