Coefficient of Price Elasticity

Coefficient of Price Elasticity Assignment Help

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Coefficient of Price Elasticity

The coefficient of price elasticity is a pure number showing the extent or relationship between the change in price and the change in quantity demanded. Thus, if EP is the coefficient of elasticity, then

EP = Percentage change in quantity demanded / Percentage change in price

When EP is more than one, then demand is more elastic and when less than one demand is less elastic. When EP is equal to one, it shows a unit elasticity of demand, i.e. that the change in price is followed by an equi - proportional change in demand and when EP = zero, demand is said to be completely inelastic. On the other extreme, if EP is equal to infinity, demand is said to be perfectly elastic.

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