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Print this chapterElasticity: A Measure of Response
Read this chapter to learn about the concept of elasticity. Be sure to read Sections 5.1-5.4 following the introduction.
The Price Elasticity of Demand
Elastic, Unit Elastic, and Inelastic Demand
To determine how a price change will affect total revenue, economists place price elasticities of demand in three categories, based on their absolute value. If the absolute value of the price elasticity of demand is greater than 1, demand is termed price elastic.If it is equal to 1, demand is unit price elastic. And if it is less than 1, demand is price inelastic.