Different products react differently to the price change. A price change for a essential product such as rice has little impact on demand while the price change in other products has huge impact on demand. This gives rise to the different types of price elasticities. Price elasticities are generally classified into the following categories.

• Perfectly elastic demand

• Absolutely inelastic demand or perfectly inelastic defrrand

• Unit elasticity of demand

• Relatively elastic demand

• Relatively inelastic demand

1. Perfectly elastic demand (ep = ∞)

Here there is no need for reduction in price to cause an increase in demand, f this be the case, a firm can sell all the quantity it wants at the prevailing price, but the firm can sell none at all at even a slightly higher price. Here the demand curve is horizontal.

2. Absolutely inelastic demand or perfectly inelastic demand (ep=0) :

Absolutely inelastic demand is where a change in price howsoever large, causes no change in the quantity demanded of a product. Here, the shape of the demand curve is vertical. Some examples of absolutely inelastic demand Y Price P D 0 X Quantity demanded are the demand of essential commodities such as rice, wheat etc. whose change is price does not affect the quantity demanded.

3. Unit elasticity of demand (ep = 1) :

Unit elasticity is where a given proportionate change in price causes and equal proportionate change in the quantity demanded of the product. The shape of the demand curve here is that of a rectangular hyperbola.

4. Relatively Elastic of Demand (ep>1) :

It is where a reduction in price leads to more than proportionate change demand. Here the shape of the demand curve in flat.

5. Relatively in elastic demand

It is where a decline in price leads to less than proportionate increase in demand. Here the shape of the demand curve is steep