Elasticity Along a Demand Curve
Microeconomics
A diagram showing how price elasticity of demand changes along a straight-line demand curve, from elastic to unitary elastic to inelastic.
Curves and Elements
demand
Demand Curve (D): Shows the inverse relationship between price and quantity demanded.
elastic
Elastic Demand: At higher prices and lower quantities, PED is greater than 1, so quantity demanded is relatively responsive to price changes.
unitary
Unitary Elastic Demand: At the midpoint of the demand curve, PED equals 1, meaning the percentage change in quantity demanded equals the percentage change in price.
inelastic
Inelastic Demand: At lower prices and higher quantities, PED is less than 1, so quantity demanded is relatively unresponsive to price changes.
Price elasticity of demand measures how responsive quantity demanded is to a change in price.
At higher prices and lower quantities, demand is elastic, meaning PED is greater than 1.
At the midpoint of a straight-line demand curve, demand is unitary elastic, meaning PED equals 1.
At lower prices and higher quantities, demand is inelastic, meaning PED is less than 1.
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