Interpreting the Value of Elasticity

Response to Price Changes

Responsive

Unresponsive

Proportional

Value of

Elasticity

Ed > 1

Ed < 1

Ed = 1

Demand Elasticity

Elastic

Inelastic

Unitary elastic

Magnitudes of Change

%?QD > %?P

%?QD < %?P

%?QD = %?P

Type of Elasticity

Elastic

Inelastic

Substitutes Available

Many

Few

The main determinant of demand elasticity is the availability of substitutes for the good in question.

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