ELASTICITY OF DEMAND AND SUPPLY

CONCEPTS of ELASTICITY
ELASTICITY - It is a measure use in response to changes in the determinants of demand and supply PRICE ELASTICITY A measure used in determining the percentage change in quantity against the percentage change in price.

INCOME ELASTICITY The percentage change in quantity compared to the percentage change in income CROSS ELASTICITY The percentage change in quantity of one good compared to the percentage change in the price of related goods.

PRICE ELASTICITY DEMAND

It is the degree of reaction or response of the buyers to change in price of goods and sewrvices

TYPES OF ELASTICITY
ELASTIC percentage change in price leads to proportionately greater percentage change in quantity demanded. This means that a one percent change in price calls for more than one percent change in quantity demanded.

INELASTIC Demand is described as inelastic when a percentage change in price results in a proportionately lesser change in price evokes less than one percent change in quantity demanded UNITARY - demand in unitary when percentage change in price leads to a proportionately equal percentage change in quantity demanded. PERFECTLY ELASTIC percentage change in quantity demanded can change infinitely. OERFECTLY INELASTIC percentage change in price creates no change in quantity. Demanded. There is no change in quantity of demand.