Unit Elastic
Definition
Unit elastic refers to a situation where the percentage change in quantity demanded or supplied is equal to the percentage change in price. In other words, when the price changes by a certain percentage, the quantity demanded or supplied changes by an equal percentage.
Analogy
Imagine you have a rubber band that stretches exactly as much as you pull it. If you stretch it 10%, it will also increase its length by 10%. This is similar to unit elastic, where the quantity changes proportionally with the price.
Related terms
Elasticity of Demand: It measures how responsive the quantity demanded is to a change in price. If demand is elastic, a small change in price leads to a large change in quantity demanded.
Elasticity of Supply: It measures how responsive the quantity supplied is to a change in price. If supply is elastic, a small change in price leads to a large change in quantity supplied.
Inelastic: When demand or supply is relatively unresponsive to changes in price. In this case, even if there's a significant change in price, there won't be much impact on quantity demanded or supplied.
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