Page 38 - VIRANSH COACHING CLASSES

Perfectly inelastic demand Ed = 0 more than proportionate change in quantity

Y demanded, the demand is said to be relatively
elastic. For example, 50% fall in price leads
D to 100% rise in quantity demanded.
Price P 1 Ed = %  Q

P Ed = 0 %  P
Ed = 100 ∴Ed = 2
P 2 50
D Ed > 1
0 Q X Relatively elastic demand
Quantity Demanded Y
Fig. 3.12
In figure 3.12, when price rises from OP to P D Ed > 1
OP or when price falls from OP to OP , demand Price
1 2 D
remains unchanged at OQ. Therefore, the demand P 1
curve is a vertical straight line parallel to the Y
axis, indicating perfectly inelastic demand. 0 Q Q 1 X
Quantity Demanded
3) Unitary elastic demand (Ed = 1) : Fig. 3.14
When a percentage change in price leads to a In figure 3.14, when price falls from OP to OP
1
proportionate change in quantity demanded (50%), demand rises from OQ to OQ (100%).
1
then demand is said to be unitary elastic. For Therefore, the demand curve has a flatter slope.
example, 50% fall in price of a commodity
leads to 50% rise in quantity demanded. 5) Relatively inelastic demand (Ed < 1) :
%  Q 50 When a percentage change in price leads
Ed = = = 1 ∴ Ed = 1 to less than proportionate change in the
%  P 50
Unitary elastic demand quantity demanded, demand is said to be
relatively inelastic. For example, 50%
Y
fall in price leads to 25% rise in quantity
demanded.
D 25
Price P Ed = 1 Ed = %  Q = 50 = 0.5
%  P
P 1 D Ed = 0.5 ∴Ed < 1
Relatively inelastic demand. Ed < 1

0 Q Q 1 X Y
Quantity Demanded
Fig. 3.13 D
In figure 3.13, when price falls from OP Price P Ed < 1
to OP (50%), demand rises from OQ to OQ
1 1 P
(50%). Therefore, the slope of the demand curve 1 D
is a 'rectangular hyperbola'.
0 QQ X
1
4) Relatively elastic demand (Ed >1) : Quantity Demanded
When a percentage change in price leads to
Fig. 3.15
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