Question

If the elasticity is greater than one, is demand elastic or inelastic? If the elasticity equals zero, is demand perfectly elastic or perfectly inelastic?

Short answer

If elasticity is more than one,demand is elastic, which means that a price increase results in a drop in the amount required. If elasticity equals zero,demand is perfectly inelastic, which means that an increase in price does not affect the quantity required.

Step-by-step solution

 If elasticity is greater than one, then:

If elasticity is greater than one, then demand is elastic.

When prices vary, the quantity demanded changes, according to the law of demand. Elasticity is a measure of how consumers react to price fluctuations. If the absolute value of elasticity is less than one, the reaction is said to be inelastic; if it is more significant than one, the response is said to be elastic. When the elasticity of demand exceeds one, the percentage change in quantity demanded exceeds the percentage change in price.

If elasticity equals zero, then:

If elasticity equals zero, then demand is perfectly inelastic.

Demand is perfectly inelastic is when the price changes, there is no change in the quantity needed.