![]() Therefore, if the price elasticity of demand equals one, the good is unit elastic. Indicating that X% change in price results in an X% change in the quantity demanded. If a change in price comes with the same proportional change in the quantity demanded, it is said that the good is unit elastic. If an inelastic good has its price increased, it will lead to increased revenues because each unit will be sold at a higher price. When the quantity demanded does not respond to a change in price, it is said that demand is perfectly inelastic. When the price elasticity of demand is less than one, the good is considered to show inelastic demand. The lower the price elasticity of demand, the less responsive the quantity demanded is given a change in price. ![]() If the price of an elastic good increases, there is a corresponding quantity effect, where fewer units are sold, and therefore reducing revenue. When the quantity demanded drops to zero with a rise in price, it is said that demand is perfectly elastic. When the price elasticity of demand is greater than one, the good is considered to demonstrate elastic demand. The larger the price elasticity of demand, the more responsive quantity demanded is given a change in price. It is common to simply drop the negative of the quotient. The law of demand states that an increase in price reduces the quantity demanded, and it is why demand curves are downwards sloping unless the good is a Giffen good. It is computed as the percentage change in quantity demanded over the percentage change in price, and it will commonly result in a negative elasticity because of the law of demand. Price elasticity of demand demonstrates how a change in price affects the quantity demanded. If income elasticity is negative, the good is inferior.
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