Price Elasticity of Demand: Different Types

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Luxury Goods
Luxury goods are also known to be price elastic because their demand varies with a change in their price. This is because these items such as branded bags, clothing items, watches, and other products are not essentials. There are numerous alternatives to them. Thus, for instance, if a brand increases the price of its bag from INR 10,000 to INR 16,000 then the buyers may look for affordable alternatives or wait for sale or discount offers. Similarly, if the cost of a branded bag or watch goes down by 30-40%, then its demand is likely to surge.


Here is a look at the different kinds of price elasticity of demand:

Perfectly Elastic – This means that the changes in the price of a commodity result in its demand falling to zero. This occurs when the percentage change in the demand of a product divided by the percentage change jordan phone number list in its price equals to infinity.
Elastic – The price of a product is said to be elastic when its demand varies significantly with the change in its price.
Inelastic – When the change in a product’s price results in an insignificant change in its demand, then it is said to be inelastic.
Perfectly Inelastic – When the change in the price of a commodity does not impact its demand at all, then it is said to be inelastic. In such a case, the percentage change in the demand for a product divided by the percentage change in its price is equal to 0.
Unitary – When the change in the price of a product has an equal impact on its demand, then it is termed as unitary. For instance, if the cost of a product is increased by 20%, its demand also rises by 20%. In this case, the percentage change in the product’s demand divided by the percentage change in its price equals 1.