{"id":5938,"date":"2016-07-19T18:00:37","date_gmt":"2016-07-19T18:00:37","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/macroeconomics\/?post_type=chapter&p=5938"},"modified":"2016-07-19T18:00:37","modified_gmt":"2016-07-19T18:00:37","slug":"reading-three-categories-of-elasticity","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/suny-hccc-macroeconomics\/chapter\/reading-three-categories-of-elasticity\/","title":{"raw":"Reading: Three Categories of Elasticity","rendered":"Reading: Three Categories of Elasticity"},"content":{"raw":"\"Photo<\/a>\n\nIt\u2019s helpful to divide elasticities\u00a0i<\/span>nto three categories: elastic, inelastic, and unitary. An <\/span>elastic demand<\/span><\/strong> or elastic supply<\/strong> is one in which the elasticity is greater than 1, indicating a high responsiveness to changes in price. Elasticities that are less than 1 indicate low responsiveness to price changes and correspond to inelastic demand<\/strong> or inelastic supply<\/strong>. Unitary elasticities<\/strong> indicate proportional responsiveness of either demand or supply. In other words, the change in demand or supply is equal to the change in price<\/span>, and the elasticities equal 1. These ranges are summarized in Table 1, below.\n
Table 1.Three Categories\u00a0of Elasticity: Elastic, Inelastic, and Unitary<\/th>\n<\/tr><\/thead>
If . . .<\/th>\nThen . . .<\/th>\nAnd It\u2019s Called . . .<\/th>\n<\/tr>
% change in quantity > %\u00a0change in price<\/td>\n% change in quantity %\u00a0change in price > 1<\/td>\nElastic<\/td>\n<\/tr>
% change in quantity = %\u00a0change in price<\/td>\n% change in quantity %\u00a0change in price = 1<\/td>\nUnitary<\/td>\n<\/tr>
% change in quantity < %\u00a0change in price<\/td>\n% change in quantity %\u00a0change in price < 1<\/td>\nInelastic<\/td>\n<\/tr><\/tbody><\/table>\n\u00a0","rendered":"

\"Photo<\/a><\/p>\n

It\u2019s helpful to divide elasticities\u00a0i<\/span>nto three categories: elastic, inelastic, and unitary. An <\/span>elastic demand<\/span><\/strong> or elastic supply<\/strong> is one in which the elasticity is greater than 1, indicating a high responsiveness to changes in price. Elasticities that are less than 1 indicate low responsiveness to price changes and correspond to inelastic demand<\/strong> or inelastic supply<\/strong>. Unitary elasticities<\/strong> indicate proportional responsiveness of either demand or supply. In other words, the change in demand or supply is equal to the change in price<\/span>, and the elasticities equal 1. These ranges are summarized in Table 1, below.<\/p>\n\n\n\n\n\n\n\n\n
Table 1.Three Categories\u00a0of Elasticity: Elastic, Inelastic, and Unitary<\/th>\n<\/tr>\n<\/thead>\n
If . . .<\/th>\nThen . . .<\/th>\nAnd It\u2019s Called . . .<\/th>\n<\/tr>\n
% change in quantity > %\u00a0change in price<\/td>\n% change in quantity %\u00a0change in price > 1<\/td>\nElastic<\/td>\n<\/tr>\n
% change in quantity = %\u00a0change in price<\/td>\n% change in quantity %\u00a0change in price = 1<\/td>\nUnitary<\/td>\n<\/tr>\n
% change in quantity < %\u00a0change in price<\/td>\n% change in quantity %\u00a0change in price < 1<\/td>\nInelastic<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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