3. The Formula:
% Change in quantity demanded
Pde = __________________________
% Change in Price of the commodity
If answer is between 0 If the answer is
and -1: the relationship between -1 and infinity:
is inelastic the relationship is
elastic
Note: PED has (–) sign in front of it because as price
rises.. demand falls and vice-versa
(inverse relationship between price and demand)

4. Slope is normally described by Elasticity is the measurement
the ratio of the "rise" divided of how changing one economic
by the "run" between two variable affects others. it is the
points on a line. ratio of the percentage change in
one variable to the percentage
change in another variable.
Q % Q
_____________
Slope = ____________ Price Elasticity =
P % P

6. 1. Perfectly Elastic Product (Ped = ∞)
2. Perfect Inelastic Product (Ped = 0)
3. Elastic Product (1 < Ped< ∞)
4.Inelastic Product (0 < Ped< 1)
5. Unitary Elastic Product (Ped = 1)

7. Perfectly Elastic Demand
A perfectly elastic
demand is one whos
demand curve is a
perfectly horizontal
line. This means that
at the same price for
the item, the consumer
is willing to buy more
and more even at that
same price.

8. Perfectly Inelastic Demand
When a price change
has no effect on the
supply and demand of a
good or service, it is
considered perfectly
inelastic. An example of
perfectly inelastic demand
would be a life saving
drug that people will pay
any price to obtain. Even
if the price of the drug
were to increase
dramatically, the quantity
demanded would remain
the same.

9. Elastic Demand
Elastic demand means that
demand for a product is
sensitive to price changes.
For example, if the selling
price of a product is
increased, there will be
fewer units sold. If the
selling price of a product
decreases, there will be an
increase in the number of
units sold. Elastic demand
is also referred to as the
price elasticity of demand.

10. Inelastic Demand
A situation in which
the demand for a product does
not increase or decrease
correspondingly with a fall or
rise in its price. From
the supplier's viewpoint, this is
a highly desirable situation
because price and total
revenue are directly related; an
increase in price increases total
revenue despite a fall in
the quantity demanded.

11. Unitary Demand
A unitary elastic
product is one in which
for a certain amount of
change in price, there is
the same amount of
change in sales. Hence, if
I raise the price of a
product by 5%, then the
recorded fall in sales will
be exactly 5% and vice
versa.