Demand Schedule for a Commodity with Unitary Price Elasticity of Demand

Introduction:
The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. When the price elasticity of demand is unitary, it means that the percentage change in quantity demanded is equal to the percentage change in price. In other words, the demand for the commodity is exactly responsive to changes in price.

Demand Schedule:
A demand schedule shows the quantity demanded at different price levels. In the case of a commodity with unitary price elasticity of demand, the demand schedule will reflect a proportional change in quantity demanded corresponding to changes in price.

Below is an example of a demand schedule for a commodity with unitary price elasticity of demand:

| Price | Quantity Demanded |
|-------|------------------|
| $10 | 100 |
| $8 | 125 |
| $6 | 150 |
| $4 | 200 |
| $2 | 250 |

Explanation:
- As the price decreases from $10 to $8, the quantity demanded increases from 100 to 125. This shows a proportional response to the change in price.
- Similarly, as the price decreases further to $6, the quantity demanded increases to 150, maintaining the proportionality.
- As the price decreases to $4, the quantity demanded increases to 200, again reflecting the unitary price elasticity of demand.
- Finally, at a price of $2, the quantity demanded increases to 250 units, showing the same proportional relationship.

Key Points:
- The demand schedule for a commodity with unitary price elasticity of demand shows a proportional change in quantity demanded corresponding to changes in price.
- The percentage change in quantity demanded is equal to the percentage change in price.
- As the price decreases, the quantity demanded increases in the same proportion.
- The demand schedule can be used to analyze the responsiveness of demand to price changes and make predictions about consumer behavior.

Conclusion:
Understanding the demand schedule for a commodity with unitary price elasticity of demand is crucial for businesses to make informed decisions about pricing strategies and forecasting consumer behavior. By analyzing the responsiveness of demand to price changes, companies can optimize their pricing and maximize revenue.

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