Topics

Unit elasticity of demand

A demand curve with unitary price elasticity has a coefficient of PED equal to 1 (unity) throughout. Total spending on the product will be the same at each price level. Government intervention will not affect total spending on the product.

Unit elasticity of demand refers to a situation in which the percentage change in the quantity demanded of a good or service is equal to the percentage change in the price of the good or service. This means that if the price of a good increases by 10%, for example, the quantity demanded of the good will decrease by 10%. Unit elasticity of demand is represented by the elasticity coefficient being equal to 1.

© 2002-2025 Tutor2u Limited. Company Reg no: 04489574. VAT reg no 816865400.

Back to top