Where the percentage change in price is equal to the percentage change in quantity demanded, the price elasticity coefficient is equal to 1. In other words, a 1% increase in price leads to a 1% decrease in quantity demanded, giving us a price elasticity coefficient of 1. This is called unitary elasticity.
In other words:
- If ep= 1, we have a unitary elastic demand.
If you examine the table, you can see that shoes are close to unitary elasticity. Most goods and services in the table, however, either have an elasticity of less than 1 or more than 1.
Graphically, it can be represented as follows:
A 10,5% increase in price decreases the quantity demanded by 10,5%.