Types of Elasticities

The term elastic and inelastic are  only  relative terms. Elasticity is a matter of degree only. Based on these, there are five classifications of Elasticities are given below:-

1) Perfectly Elastic demand.

2) Perfectly Inelastic demand.

3) Relatively Elastic demand.

4) Relatively Inelastic demand.

5) Unit Elasticity of demand.

1) Perfectly elastic demand: when a small change in price results in in an infinite Lee large change in demand it is a case of perfectly elastic demand.

In the above diagram, at a given price OP the quantity demanded remains infinite. Any price above or below OP , the demand becomes zero.

2) Perfectly Inelastic demand: This is a case when there is almost no change in demand with a change in price.

 In the given figure, there is no change in the quantity demanded. When the price is zero people demand the same amount of the commodity. For eg. Necessities ( salt)

3) Relatively Elastic demand:- In this case a small change in price leads to a more than proportionate change in demand.

In the figure given above, , when the fall in price from P to P1 causes a more than proportionate change in demand from M to M1.For eg. Luxury goods.

4) Relatively Inelastic demand:-  In this case, when a large change in price results in less than proportionate change in demand. 

In the figure given above, when the price falls from P1to P2 , there is a less than proportionate increase in quantity demanded.

5) Unit Elasticity of demand:- In this case, when a change in price in followed by an equally proportionate change in Demand. 

In the figure given above, when the price decreases from P1 to P2, the quantity demanded also increases in equal propotion, from A to B.