ED

Demand Elasticity ED Types of demand elasticity (4 major) Price elasticity types, methods of measurement, determinants Income elasticity types and application Cross elasticity and advertisement elasticity A case study

A measure of responsiveness of demand for a commodity to changes in the variables confined to its demand function. ED =
Percentage / proportionate change in quantity demanded Percentage / proportionate change in determinant of demand

Price elasticity of demand (Ep) Income elasticity of demand (EI) Cross elasticity of demand (Exy) Advertisement Elasticity (EA)

Ep =

Percentage / proportionate change in quantity demanded Percentage / proportionate change in price

Perfectly elastic Perfectly inelastic Relatively elastic Relatively inelastic Unit elasticity

The Ratio Method Total Revenue Method Point Method

Nature of commodity Availability of substitutes Number of uses Consumers income Range of price change Proportion of expenditure Durability of commodity Habit Time Recurrence of demand

EI =

Percentage / proportionate change in quantity demanded Percentage / proportionate change in income

Unitary income elasticity Income elasticity greater than unity Income elasticity less than unity Zero income elasticity Negative income elasticity

Long term business planning Market strategy

Exy =

Percentage / proportionate change in quantity demanded of commodity X

Percentage / proportionate change in price of commodity Y

EA =

Percentage / proportionate change in quantity demanded

Percentage / proportionate change in advertisement expenditure