When the percentage change in demand is greater than the percentage change in price. In this case the PED elasticity value will lie between 1 and infinity.
To identify the shape of an elastic linear demand curve we do not focus on the gradient of the curve as this does not actually determine elasticity. Crucially, it is the position of the demand curve that determines elasticity. This is because all linear demand curves contain portions on the curve which can be classed as elastic, inelastic and unit elastic. Any demand curve shown (like the one below) is just a section of a much larger demand curve that extends beyond the axis.
So effectively we can see that the midpoint of the demand curve is when unitary elasticity is achieved. The bottom half of the curve is inelastic, because if the price rises - at any point below the midpoint - expenditure increases despite a quantity fall. The top half of the curve is elastic, because if the prices rises - at any point above the midpoint - expenditure decreases due to a large quantity fall.
Therefore, the easiest way to determine an elastic demand curve is to extend the section of the demand curve drawn and identify which axis it intersects. If the demand curve intersects the y axis we can judge it as being an elastic demand curve as we must be focusing on the top half of the demand curve. An example of an elastic demand curve is shown below.
Below is a diagram to highlight the changes in expenditure that occurs when there is a small price rise. When a demand curve is relatively elastic, it means that consumers are sensitive to price changes. In this instance, a small price rise leads to a large fall in demand as consumers switch to alternative cheaper substitutes.