Unit Elastic

(adjective)

Demand for a good is unit elastic when the percentage change in quantity demanded is equal to the percentage change in price.

Related Terms

Examples of Unit Elastic in the following topics:

  • Calculating Elasticities

    • For example, when the quantity demanded increases from 10 units to 15 units, the percentage change is 50%.
    • If the quantity demanded decreases from 15 units to 10 units, the percentage change is -33.3%.
    • $Price\quad Elasticity\quad of\quad Demand\quad =\quad \frac { ({ Q }_{ 2 }-{ Q }_{ 1 })\quad /\quad [({ Q }_{ 2 }+{ Q }_{ 1 })/2] }{ ({ P }_{ 2 }-{ P }_{ 1 })\quad /\quad [(P_{ 2 }+{ P }_{ 1 })/2] }$
    • $Point-Price\quad Elasticity\quad =\quad \frac { P }{ { Q }_{ d } } \times \frac { \Delta { Q }_{ d } }{ \Delta P }$

  • Interpretations of Price Elasticity of Demand

    • This would allow the business to dramatically increase the number of units sold without losing much revenue per unit.
    • In this case, any increase in price will lead to zero units demanded.
    • Elasticity along a straight line demand curve varies from zero at the quantity axis to infinity at the price axis .
    • At the midpoint, E1, elasticity is equal to one, or unit elastic.

  • Definition of Price Elasticity of Supply

    • Elasticity is defined as a proportionate change in one variable over the proportionate change in another variable:
    • Elastic goods are usually viewed as luxury items.
    • The elasticity of a good will be labelled as perfectly elastic, relatively elastic, unit elastic, relatively inelastic, or perfectly inelastic.

  • Measuring the Price Elasticity of Supply

    • An decrease in prices will lead to zero units produced.

  • Measuring the Price Elasticity of Demand

    • $Elasticity\quad =\quad \frac { \%\quad Change\quad in\quad Quantity\quad Demanded\quad }{ \%\quad Change\quad in\quad Price }$
    • First, the elasticity coefficient is a pure number, meaning that it does not have units of measurement associated with it.

  • Consumer Choice and Utility

    • They can by an additional unit of yawls (for $1) and get 12 units of satisfaction or a unit of xebecs to get 10 units of satisfaction.
    • When they buy two units of good X (2X) and three unit of good Y (3Y), they obtain 54 units of satisfaction (TUX for 2X is 18 and TUY of 3Y is 36).
    • Elasticity is a tool that is used to describe the relationship between two variables.
    • Elasticity is a convenient tool to describe how buyers respond to changes in relevant variables.
    • Elasticity can be calculated to estimate the relationship between any two related variables.

  • Defining Price Elasticity of Demand

    • A PED coefficient equal to one indicates demand that is unit elastic; any change in price leads to an exactly proportional change in demand (i.e. a 1% reduction in demand would lead to a 1% reduction in price).

  • Tax Incidence and Elasticity

  • Applications of Elasticities

    • For example, to determine how a change in the supply or demand of a product is impacted by a change in the price, the following equation is used: Elasticity = % change in supply or demand / % change in price.
    • Elastic products are usually luxury items that individuals feel they can do without.

  • Income Elasticity of Demand