Einheitspreiselastizität

Einheitspreiselastizität is an economic concept describing a specific scenario of price elasticity of demand. It occurs when the percentage change in quantity demanded is exactly equal to the percentage change in price. In such cases, the price elasticity of demand coefficient is equal to -1. This means that a 1% increase in price leads to a 1% decrease in the quantity demanded, and conversely, a 1% decrease in price leads to a 1% increase in quantity demanded. The total revenue generated by the seller remains unchanged regardless of price fluctuations when demand exhibits unit elasticity. This is because the increase in price is perfectly offset by the decrease in quantity demanded, or the decrease in price is perfectly offset by the increase in quantity demanded. Examples of goods or services with unit price elasticity are rare in reality and often theoretical. Many goods, especially those with readily available substitutes, tend to have elastic demand, where a price change leads to a proportionally larger change in quantity demanded. Conversely, necessities or goods with few substitutes often exhibit inelastic demand, where a price change leads to a proportionally smaller change in quantity demanded. Einheitspreiselastizität represents the precise midpoint between these two extremes.