What are the different types of price elasticity of demand and how are they calculated?

Price elasticity of demand measures the responsiveness of quantity demanded to a change in price. There are five different types of price elasticity of demand, which are:

1. Perfectly elastic demand (Elasticity coefficient = ∞): In this case, a small change in price leads to an infinite change in quantity demanded. The demand curve is horizontal, indicating that consumers are extremely sensitive to price changes. The formula to calculate elasticity is: Elasticity = (% change in quantity demanded) / (% change in price).

2. Perfectly inelastic demand (Elasticity coefficient = 0): Here, a change in price does not affect the quantity demanded at all. The demand curve is vertical, indicating that consumers are not responsive to price changes. The formula to calculate elasticity is the same as above.

3. Relatively elastic demand (Elasticity coefficient > 1): In this scenario, a change in price leads to a proportionately larger change in quantity demanded. The demand curve is relatively flat, indicating that consumers are responsive to price changes. The formula to calculate elasticity is the same as above.

4. Relatively inelastic demand (Elasticity coefficient < 1): Here, a change in price leads to a proportionately smaller change in quantity demanded. The demand curve is relatively steep, indicating that consumers are not very responsive to price changes. The formula to calculate elasticity is the same as above.

5. Unitary elastic demand (Elasticity coefficient = 1): In this case, a change in price leads to an equal proportionate change in quantity demanded. The demand curve has a constant slope, indicating that consumers are moderately responsive to price changes. The formula to calculate elasticity is the same as above.

To calculate the price elasticity of demand, you need to know the initial price and quantity demanded, as well as the new price and quantity demanded after a change. The formula is:

Elasticity = (% change in quantity demanded) / (% change in price)

To calculate the percentage change in quantity demanded, use the formula:

% change in quantity demanded = (new quantity demanded - initial quantity demanded) / initial quantity demanded * 100

To calculate the percentage change in price, use the formula:

% change in price = (new price - initial price) / initial price * 100

By substituting these values into the elasticity formula, you can determine the specific type of price elasticity of demand.