Price elasticity of demand = (dropping the minus sign) |
0 |
Perfectly inelastic: price has no effect on quantity demanded (vertical demand curve). |
Between 0 and 1 |
Inelastic: a rise in price increases total revenue. |
Exactly 1 |
Unit-elastic: changes in price have no effect on total revenue. |
Greater than 1, less than ∞ |
Elastic: a rise in price reduces total revenue. |
∞ |
Perfectly elastic: any rise in price causes quantity demanded to fall to 0. Any fall in price leads to an infinite quantity demanded (horizontal demand curve). |
Cross-price elasticity of demand = |
Negative |
Complements: quantity demanded of one good falls when the price of another rises. |
Positive |
Substitutes: quantity demanded of one good rises when the price of another rises. |
Income elasticity of demand = |
Negative |
Inferior good: quantity demanded falls when income rises. |
Positive, less than 1 |
Normal good, income-inelastic: quantity demanded rises when income rises, but not as rapidly as income. |
Greater than 1 |
Normal good, income-elastic: quantity demanded rises when income rises, and more rapidly than income. |
Price elasticity of supply = |
0 |
Perfectly inelastic: price has no effect on quantity supplied (vertical supply curve). |
Greater than 0, less than ∞ |
ordinary upward-sloping supply curve. |
∞ |
Perfectly elastic: any fall in price causes quantity supplied to fall to 0. Any rise in price elicits an infinite quantity supplied (horizontal supply curve). |