Explain various types of price elasticity of demand with the help of diagrams

Price elasticity of demand (PED) measures how the quantity demanded of a good responds to changes in its price. There are several types of price elasticity of demand, each reflecting a different sensitivity of quantity demanded to price changes. Let's explore the main types with diagrams:

### 1. Perfectly Inelastic Demand (PED = 0)

In this case, the quantity demanded does not change regardless of the price change. The demand curve is vertical.

**Diagram:**

```
Price |
      |     
      |      
      |      
      |      
      |___________________ Quantity
```

### 2. Inelastic Demand (0 < PED < 1)

Here, the percentage change in quantity demanded is less than the percentage change in price. The demand curve is steep.

**Diagram:**

```
Price |
      |     /
      |    /
      |   /
      |  /
      | /____________ Quantity
```

### 3. Unit Elastic Demand (PED = 1)

In this situation, the percentage change in quantity demanded is exactly equal to the percentage change in price. The demand curve is a rectangular hyperbola.

**Diagram:**

```
Price |
      |    /
      |   /
      |  /
      | /  
      |/____________ Quantity
```

### 4. Elastic Demand (1 < PED < ∞)

The percentage change in quantity demanded is greater than the percentage change in price. The demand curve is relatively flat.

**Diagram:**

```
Price |
      |       /
      |      /
      |     /
      |    /
      |___/__________ Quantity
```

### 5. Perfectly Elastic Demand (PED = ∞)

A tiny change in price leads to an infinite change in quantity demanded. The demand curve is horizontal.

**Diagram:**

```
Price |
      |___________
      |
      |
      |
      |___________________ Quantity
```

### Explanation and Examples

1. **Perfectly Inelastic Demand:** This is rare but can occur in essential or life-saving goods (e.g., insulin for diabetics).
   
2. **Inelastic Demand:** Common in necessities where consumers don't significantly reduce quantity demanded when the price increases (e.g., gasoline, basic food items).

3. **Unit Elastic Demand:** This is a theoretical case where total revenue remains constant when the price changes.

4. **Elastic Demand:** Found in luxury goods or goods with many substitutes. Consumers will reduce quantity demanded significantly if the price rises (e.g., electronics, branded clothing).

5. **Perfectly Elastic Demand:** Also rare; can occur in perfectly competitive markets where a firm can sell as much as it wants at the prevailing market price but nothing if it raises the price (e.g., agricultural products in a perfectly competitive market).

By understanding these different types of price elasticity of demand, businesses and policymakers can make informed decisions regarding pricing strategies and anticipate the effects of price changes on consumer behavior.