ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -An elastic demand is one in which the change in quantity demanded due to a change in price is large. An inelastic demand is one in which the change in quantity demanded due to a change in price is small. If the formula creates an absolute value greater than 1, the demand is elastic.

Detailed explanation-2: -Price elasticity of demand is a measurement of the change in consumption of a product in relation to a change in its price. A good is perfectly elastic if the price elasticity is infinite (if demand changes substantially even with minimal price change).

Detailed explanation-3: -Infinite elasticity or perfect elasticity refers to the extreme case where either the quantity demanded (Qd) or supplied (Qs) changes by an infinite amount in response to any change in price at all. In both cases, the supply and the demand curve are horizontal as Figure shows.

Detailed explanation-4: -Elastic demand occurs when a product or service’s demanded quantity changes by a greater percentage than changes in price. The opposite of elastic demand is inelastic demand, which occurs when consumers buy largely the same quantity regardless of price.