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Briefly Explaining Elasticity Using a Graph

8/1/2017

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Do you know how to locate different elasticities on a graph?

​Below, I will show you where the elastic, inelastic, unit elastic, perfectly elastic, and perfectly inelastic points are located. Along with locating points, I will provide examples and brief explanations on each.
Picture
Point (A)
  • Perfectly Elastic
  • Elasticity of Demand tends to be infinity
  • At any specific price, quantity demanded is infinite
  • Example: Foreign Currency Exchange, exhibits features of perfect competition when buying it

Point (B)
  • Elastic
  • Elasticity of Demand is greater than 1
  • A change in price results in a larger change in quantity demanded
  • Example: A seller increases the price of a good by a certain amount, the buyer's demand will decrease by a larger percentage as the price

Point (C)
  • Unit Elastic
  • Elasticity of Demand is equal to 1
  • A change in price results in an equal change in quantity demanded
  • Example: A seller increases the price of a good by a certain amount, the buyer's demand will decrease by the same percentage as the price

Point (D)
  • Inelastic
  • Elasticity of Demand is less than 1
  • A change in price results in a smaller change in quantity demanded
  • Example: A seller increases the price of a good by a certain amount, the buyer's demand will decrease by a smaller percentage as the price

Point (E)
  • Perfectly Inelastic
  • Elasticity of Demand tends to be 0
  • At any price change, quantity demanded does not change
  • Example: A medical drug that keeps you alive
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    Hello, as you may know my name is Kendrick Hardison. This blog will be used to share my experiences, teach things I may have learned, advise others, and much more. If you have any questions or if you would like for me to write a post on something you are interested in, click here to get to my contact page.

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Photos used under Creative Commons from SurfaceWarriors, Arenamontanus, Tilemahos Efthimiadis, gadl, Stifts- och landsbiblioteket i Skara, Amy Loves Yah, osipovva, Karin3 C., ustung, Ruth L, Robert Couse-Baker
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