Elastic Demand vs Unit Elastic
Elastic Demand and Unit Elastic are two Elasticity concepts in AP Economics that students often mix up. In short: elastic demand is elastic demand is when the quantity demanded changes more than the price changes. Meanwhile, unit elastic is unit elastic is when the percentage change in quantity demanded equals the percentage change in price. Here is how they compare side by side.
Elastic demand is when the quantity demanded changes more than the price changes.
In elastic demand, the percentage change in quantity demanded is greater than the percentage change in price. This means that consumers are very sensitive to price changes. Goods with many substitutes, such as luxury goods, often have elastic demand.
Unit elastic is when the percentage change in quantity demanded equals the percentage change in price.
In unit elastic demand, the percentage change in quantity demanded is equal to the percentage change in price. This means that the percentage change in total revenue from sales equals zero. Unit elastic is the midpoint between elastic and inelastic demand.
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