Elasticity of demand(2003)
- 1. Elasticity of DemandThe price elasticity of demand measures the relative change in quantity demanded of a commodity in response to a relative change in its price10/4/20101CHARU NAGPAL
- 2. Degrees of elasticity ofdemandPerfectly elastic demandHighly elastic demandUnitary elastic demandHighly inelastic demandPerfectly inelastic demand10/4/20102CHARU NAGPAL
- 3. Perfectly elastic demandWhen price remains same
- 4. Quantity demanded changesHighly elastic demandWhen change in demand is much more than change in price10/4/20103CHARU NAGPAL
- 5. Unitary elastic demandChange in demand = change in priceHighly inelastic demandWhen change in price is more than the change in quantity demanded10/4/20104CHARU NAGPAL
- 6. Perfectly inelastic demandWhen change in demand does not change with change in price10/4/20105CHARU NAGPAL
- 7. Methods of calculating elasticity of demandPercentage methodTotal outlay methodArc methodPoint method10/4/20106CHARU NAGPAL
- 8. Types of elasticity of demandPrice elasticity of demandIncome elasticity of demandCross elasticity of demand10/4/20107CHARU NAGPAL
- 9. Determinants of elasticity of demand10/4/20108CHARU NAGPAL
- 10. 1. Time elementDemand is inelastic in short period but elastic in long period. It is because in the long run, a consumer can change his habits more conveniently than in the short run10/4/20109CHARU NAGPAL
- 11. 2. Nature of CommodityNecessaries like salt, match box etc… have inelastic demand Luxuries like ac, furniture, fashionable clothes, have highly elastic demand10/4/201010CHARU NAGPAL
- 12. 3. Availability of SubstitutesDemand for those commodities which have substitutes are relatively more elastic because when the price of commodity falls in relation to its substitute, the consumer will go in for it and so its demand will increase10/4/201011CHARU NAGPAL
- 13. Price level Income of consumer Habit of consumer Postponement of useDifferent uses of commodity10/4/201012CHARU NAGPAL