Elasticity Along a Demand CurveSL

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.

1
Price elasticity of demand measures how responsive quantity demanded is to a change in price.
2
At higher prices and lower quantities, demand is elastic, meaning PED is greater than 1.
3
At the midpoint of a straight-line demand curve, demand is unitary elastic, meaning PED equals 1.
4
At lower prices and higher quantities, demand is inelastic, meaning PED is less than 1.

Explain how price elasticity of demand changes along a straight-line demand curve.

Show example answer

Along a straight-line demand curve, demand is elastic above the midpoint, unitary elastic at the midpoint, and inelastic below the midpoint.

Written explanations of the theory behind this diagram.

Understanding Price Elasticity of Demand in Real Markets

Price Elasticity of Demand: How Responsive Consumers Are to Price Changes

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