Elasticity of Demand

Dictates how drastically buyers will cut back or increase their demand for a good when the price changes What does this mean?  When the price of a product changes “elasticity of demand” shows how buyers will react

Inelastic This is demand for a product that shows consumers will keep buying it even if the price increases If a product is inelastic you will buy it even if the price increases

Elastic This describes demand that is very sensitive to a change in price In other words if a product is elastic, when the price increases people will buy less of it

How are Inelastic and Elastic used? They are both described as less than, equal to, or greater than 1, where 1 represents the demand of a product If the elasticity of demand for a product is less than 1 then it is inelastic  Meaning you can raise the price and people will keep buying it If the elasticity of demand is greater than one then it is elastic  This means if you raise the price of a product people will stop buying the product

Unitary Elastic This is when the value of demand of a product is exactly 1  This means when you change the price of a product the demand for that product will change in the same way So if I have a product that is unitary elastic and sell it for 2 dollars, and then raise the price to 3 dollars the demand for it will decrease by 50% because I raised the price by 50% percent

Quiz 1. What does elasticity of demand show? 2. If a product is inelastic will consumers buy it if the price increases? 3. If people buy less of a product when the price is increased can it can be described as elastic or inelastic? 4. If the elasticity of demand for a product is less than 1 it is, elastic or inelastic? 5. If the elasticity of demand for a product is 1 then it is?

ture=related ure=related