Professional Documents
Culture Documents
Demand
Presented By:
Rishav Pandey(322)
Priyanka Jain(319)
Raman Verma(321)
Rohit Gera(318)
Rishabh Rawat(320)
Priyabrat Dehury(324)
Rahul Gusain(325)
Content
• What is Elasticity of Demand
• Degrees of Elasticity of Demand
• Types of Elasticity of Demand
Price Elasticity of Demand
Cross Elasticity of Demand
Income Elasticity of Demand
• Method of calculating Elasticity of Demand
• Factors affecting Elasticity of Demand
• Uses of Elasticity of Demand
• Case Study
What is Elasticity of Demand?
• How sensitive the demand for a good is to the
changes in other economic variables, such as the
prices and consumer income.
• ep = % change in quantity of a good demanded
% change in another economic variable
FORMULA:
PED = %Change in Quantity Demanded / %Change in Price
DEGREES OF PRICE ELASTICITY OF
DEMAND
1. Perfectly Elastic Demand:
DEGREES OF PRICE ELASTICITY OF
DEMAND(cntd...)
2. Perfectly Inelastic 3. Unitary Elastic Demand:
Demand:
DEGREES OF PRICE ELASTICITY OF
DEMAND(cntd...)
4. Relatively Elastic 5. Relatively Inelastic Demand:
Demand:
FACTORS AFFECTING PRICE
ELASTICITY OF DEMAND
• Nature of commodity
• Availability of substitutes
• Income level
• Level of price
• Postponement of consumption
• Number of uses
• Share in total expenditure
• Time period
• Habits
Income Elasticity of Demand
Types Of Income Elasticity Of Demand:
Positive Income elasticity of demand
Y
D
A
Income
X
O B S Quantity Demanded
Income Elasticity of Demand(cntd…)
Negative Income Elasticity of Demand
Price
Total Revenue
B S
Quantity Demanded
(000s)
Income Elasticity of Demand(cntd…)
Zero Income Elasticity of Demand
Y D
Y’’
Income
Y
Y’
O D X
Quantity Demanded
Cross Elasticity of Demand
Methods of Calculating Elasticity of Demand
dQ / Q dQ P
ep = .
dP / P = dP Q
Methods of Calculating Elasticity of Demand
• Nature of product
• Postponement of consumption
• Number of uses
• Time period
• Decision of Monopolist
• The Government
• Business Sector
• Input Price