Price elasticity greater that one (pE > 1) means that demand responds greatly to changes in price. This occurs when the product has many viable substitutes, allowing customers to switch over easily. Usually, most luxuries, or dispensable items have such elastic demand.
The demand for a product becomes Perfectly Elastic when the quantity supplied or demanded responds wildly to changes in price. Such situations occur rarely, but when they do denotes easily access and availability of high quality products at lesser prices. The graphical illustration of such a state is as a horizontal line in the graph.
Price elasticity less than 1 (pE <1) denotes inelastic demand, meaning demand does not change significantly in response to changes in price. This occurs when the product or service is essential in nature, there are no competing products available at attractive prices, or when the product is a monopoly. Most necessities in life have inelastic demand, and people tend to purchase the same regardless of the increase in price, unless close substitutes that serve the same purpose exists, in which case demand becomes elastic.
At times, elasticity becomes zero (pE=0), or the quantity demanded does not change at all regardless of the change in price. This is a case of Perfectly Inelastic demand, illustrated by a vertical line on the graph.
Unit elasticity is when elasticity is exactly equal to one (pE=1). This means that the demand changes in exact proportion to the fluctuations in price. This is theoretical, and happens in real life more by accident or coincidence.