Question

What will be the elasticity of demand in the following situation?

When the proportionate change in quantity demanded is equal to the proportionate change in price.

Answer 1

1. When the proportionate change in quantity demanded is equal to the proportionate change in price, the Price Elasticity of Demand (PED) is equal to 1, indicating unitary (or unit) elastic demand.
2. This is because the percentage change in quantity demanded is exactly equal to the percentage change in price.