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What is an example of unitary elastic demand?

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Quick Answer

While there are no perfect examples of unitary elastic demand in real life, a close example is clothing. Decreases in price of the supply, whether from a sale or discount store, often creates an approximately equal increase in demand.

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Full Answer

The term unitary elastic demand, also known as unit elastic demand or unitarily elastic demand, means that for every percent increase or decrease in demand, there will be an equal corresponding increase or decrease in supply. The price elasticity of demand, which calculates the rate of change of the quantity over the rate of change of the supply of a good, is equal to one for a unitary elastic good.This can only occur with goods that have close substitutes or alternatives, like clothing brands.

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