CBSE Class 12-commerce Answered
Price elasticity of demand for a good is defined as the percentage change in demand for a good divided by the percentage change in its price.
Price elasticity of demand is a pure number and it does not depend on the units in which the price of the good and the quantity of the good are measured.
Price elasticity of demand is a negative number as the demand for a good is negatively related to the price of a good.
i. At a particular price, the percentage change in demand for a good is less than the percentage change in price and then the demand for the good is inelastic at that price.
ep <1
ii. At a particular price, the percentage change in demand for a good is equal to the percentage change in price and then the demand for the good is unitary elastic at that price.
ep =1
iii. At a particular price, the percentage change in demand for a good is greater than the percentage change in price and then the demand for the good is elastic at that price.
ep >1