Price elasticity is a measure of effect of a price change or a change in the quantity supplied on the demand of a product or service. Price elasticity of demand is a measure that gives the percentage change in quantity demanded in response to one percent change in price. A product is elastic if with 1% the change in the price, the change in demand is more than 1%. A product is perfectly elastic if the change in demand is more than 1% with 1% change in price. A product is inelastic if after 1% change in price the change in demand stays between 0 and 1 percent. A product in perfectly inelastic if after 1% change in price the change in demand is equal to 0% A product is unitary elastic if with 1% change in the price the change in demand is equal to 1%.
