Q.Explain the different degrees of price elasticity of demand.

Price elasticity can range across five recognised degrees depending on its numerical value.

Price elasticity of demand, $E_d = \dfrac{\%\Delta Q_d}{\%\Delta P}$, is classified into five degrees by its numerical value:

1. Perfectly elastic ($E_d = \infty$) — an infinitesimally small change in price causes an infinitely large change in quantity demanded; the demand curve is a horizontal straight line.
2. Relatively elastic ($E_d > 1$) — quantity demanded changes by a larger percentage than price; the demand curve is comparatively flat.
3. Unitary elastic ($E_d = 1$) — the percentage change in quantity demanded exactly equals the percentage change in price; total outlay stays constant as price changes. …

Confusing 'relatively elastic' (Ed>1) with 'perfectly elastic' (Ed=∞) — the two are different degrees; also assuming a downward-sloping straight-line demand curve has the SAME elasticity throughout its length, when in fact e …