If Q1 and Q2 are quantity of the demand of commodities at
prices P1 and P2, then the elasticity is the ratio
{(Q2-Q1)/(Q1+Q2)}/{(P2-P1)/(P1+P2)}.
Therefore eastity =
(Q2-Q1)(P2-P1)/((Q1+Q2)(P2+P1))
So the elasticity is zero
, when Q1 = Q2 for any change in price .
That means when
the demand is unaffected by any change in price of the commodity, the elasticity zero.
Under the zero elasticity condition , neither the supply of commodities nor the demand
for the commodities show any variation dispite change in
price.
Elasticity is a pure unitless number as it is the
ratio of two absolute ratios. The numerator is the ratio of commodities and so it is
unitless.The denominator is also a ratio of prices and so
unitless.
The elasticity is made use of in market
analysis.
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