# elasticity

 When elasticty is greater than 1 demand is elastic You got a elasticty of 1.5. what does this mean? A coefficient of 1.5 for price elasticity of demand means that for every 1 pecent chnage in price,  there will be a corresponding 1.5 percent change in quantity demanded in the opposite direction of the price change. Demand is elastic. price elasticity of demand formula Q2 - Q1            P2 + P1    —————   X   —————Q2 + Q1            P2 - P1 Inelastic demand elasticity less than 1 If elasticity is exactly 1 it is called unit elastic Perfect elasticity Perfrectly horizontal line on graph perfect inelasticity perfect vertical line on graph The more flat a demand curve is the more elastic it is on a demad curve.... very elastic at the top and progressively less elastic down the curve something that is elastic - has a lot of substitutes- when price changes a little and quantity demanded changes a lot something that is inelastic - has fewer substitutes- lots of price change and little change in quantity demanded AuthorAnonymous ID175833 Card Setelasticity Descriptionecon 2 Updated2012-10-06T10:44:33Z Show Answers