What Does Unitary Elastic Demand Mean?
Unitary elastic demand is a type of demand which changes in the same proportion to its price. It means that the percentage change in demand is exactly equal to the percentage change in price. It is a fundamental used in economics to explain the responsiveness of variables to each other. Unit elastic describes a change in one variable that produces an equally proportional change in another variable. Here are its two measures:
Unitary elastic demand is a type of elasticity of demandwhere the product demand changes in a similar proportion to the price. This is where a price reduction equally raises the demand, and a price increase equally falls demand. Unitary elasticity of demand is a situation in which the price change affects the quantity demanded at an equivalent percentage. For example, when the price of a good rises 3%, the quantity demanded decreases by 3%. Unit elastic demand is referred to as a demand in which any change in the price of a good leads to an equally proportional change in quantity demanded. In other words, the unit elastic demand implies that the percentage change in quantity demanded is exactly the same as the percentage change in price. Unitary elastic demand refers to a market scenario where the quantity demanded of a good or service changes in direct proportion to changes in its price. Essentially, this term describes a situation where the percentage change in quantity demanded is equal to the percentage change in price. Unitary elastic demand means that a percentage change in price results in an equal percentage change in quantity demanded, indicating elasticity equals one. It can be mathematically represented as elasticity (e) being equal to 1, meaning total revenue remains constant.
