Unit Elastic Demand
Definition
Unit elastic demand refers to a situation where the percentage change in quantity demanded is equal to the percentage change in price. In other words, when the price of a product changes by a certain percentage, the quantity demanded changes by an equal percentage.
Analogy
Imagine you have a favorite snack that costs $1 per bag. If the price increases by 10%, and as a result, you decide to buy 10% less of that snack, then your demand for it is unit elastic.
Related terms
Inelastic Demand: Inelastic demand occurs when the percentage change in quantity demanded is less than the percentage change in price. This means that consumers are not very responsive to changes in price.
Elastic Demand: Elastic demand occurs when the percentage change in quantity demanded is greater than the percentage change in price. This means that consumers are highly responsive to changes in price.
Price Elasticity of Demand: Price elasticity of demand measures how sensitive consumers are to changes in price. It calculates the percentage change in quantity demanded divided by the percentage change in price.
"Unit Elastic Demand" appears in:
Study guides (1)
Are you a college student?
Study guides for the entire semester
200k practice questions
Glossary of 50k key terms - memorize important vocab
Resources
© 2024 Fiveable Inc. All rights reserved.
AP® and SAT® are trademarks registered by the College Board, which is not affiliated with, and does not endorse this website.