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INTRODUCTION
In this report we will see about the changes in Price and the changes in quantity Demanded.
Demand is defined as the amount of good that a buyers are willing and able to purchase.
Price is defined as the amount of money expected, required or given in payment for
something. Supply is defined as the amount of goods or service offered for sale. Elasticity is
defined as the degree to which a demand or supply is sensitive to changes in price or income.
Inelasticity is defined as the demand or supply are insensitive to changes in price or income.
Below comes up with the examples of elasticity.
EFFECT OF ELASTICITY OF DEMAND
1. Oil Consumption
Oil consumption various very gradually in a family as every family uses Oil in their
food or for cooking. These below is the examples of Ground Nut Oil product which
changes depending on the consumption
Calculating Elasticity by comparing Prices of Groundnut oil as
Price of Ground Nut (in ml) Quantity of Ground Nut (in Milli
Liters)
105 1000
150 700
200 525
250 420
300 350
Price of Ground Nut Oil
350
300
250
200
150
100
50
0
300 400 500 600 700 800 900 1000 1100
Calculating Elasticity of Ground Nut Oil, where ‘P’ represents Price of Ground Nut
Oil and ‘Q’ represents Quantity of Ground Nut Oil
Elasticity is defined by using Midpoint formula as
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
Price elasticity of demand = =
B P 1+ P 2
(P 2−P 1) /[ ]
2
Now lets take the values from the table for calculating Elasticity as follows
P1 = 105, P2 = 150, Q1 = 1000, Q2 = 700
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
Price elasticity of demand = = = -1
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 150, P2 = 200, Q1 = 700, Q2 = 525
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
Price elasticity of demand = = = -0.98313
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 200, P2 = 250, Q1 = 525, Q2 = 420
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 250, P2 = 300, Q1 = 420, Q2 = 350
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
2. Salt Ranges
Salt is the main ingredient in any food which when added helps to increase the taste of
the food. The price of Salt keeps changes the amount of salt consumed. Below gives
the change in price and the amount of quantity of Salt consumed
Price of Salt (in gms) Quantity of Salt consumed (in gms)

18 1000
25 1000
30 1000
35 1000
40 1000
Price of Salt
45
40
35
30
25
20
15
10
0
800 1000 1200 1400 1600 1800 2000
Calculating Elasticity of Salt, where ‘P’ represents Price of Salt and ‘Q’ represents
Quantity of Salt
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
Now let’s take the values from the table for calculating Elasticity as follows
P1 = 18, P2 = 25, Q1 = 1000, Q2 = 1000
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
Price elasticity of demand = = =0
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 25, P2 = 30, Q1 = 1000, Q2 = 1000
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 30, P2 = 35, Q1 = 1000, Q2 = 1000
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 35, P2 = 40, Q1 = 1000, Q2 = 1000
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
3. Air Conditioner
These days due to increase in Population the temperature in our surroundings getting
increased which resulting into increasing of Global warming. These days it has
become a mandatory of having a Cooler or Air- Conditioner in a family. Usage of
Air- Conditioner and Cooler varies from family to family.
The heavy increase in Price of Air – Conditioner leads to the decrease in the demand
of Air – Conditioner and which leads to the increase in the demand of Cooler this
effect is called as The Cross-Price Elasticity of Demand.
Let we shall take the percentage of increase in Price of Air – Conditioner is 20%. This
leads to increase in the demand to Cooler by the percentage of 10%. By this we can
calculate
Cross-Price elasticity of demand =
Percentage change∈the Quantity demand of Cooler

Percentage change ∈the Priceif Air−Conditioner
10
= = 0.5
20
4. Gold
Gold is the one of the primary luxuary item consisted by many families. Every family
keeps Gold as an item of pride or as an item of keeping money in solid state The value
of Gold various at various times.
These below are the prices of Gold and the quantity of it Gold used by general people
Price of Gold Quantity of Gold Demanded (in 10

Grams)
50,000 10
45,000 15
40,000 20
35,000 25
30.000 30
Price of Gold
60,000
50,000
40,000
30,000
20,000
10,000
0
5 10 15 20 25 30 35
The above listed are the prices and quantity obtained for those prices. By using this
price and the quantity obtained we can draw a graph as
Calculating Elasticity of Gold, where ‘P’ represents Price of Gold and ‘Q’ represents
Quantity of Gold
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
Now lets take the values from the table for calculating Elasticity as follows
P1 = 50,000, P2 = 45,000, Q1 = 10, Q2 = 15
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 45,000, P2 = 40,000, Q1 = 15, Q2 = 20
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 40,000, P2 = 35,000, Q1 = 20, Q2 = 25
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 35,000, P2 = 30,000, Q1 = 25, Q2 = 30
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
5. Milk
Milk is a white, nutrient rich liquid food produce in mammary glands of mammals.
Almost all households use Milk as their one of the food products during early hours.
This milk product can be used as Tea, Coffee for many employees. The quantity of
Milk consumption varies from household to house hold.
Elasticity of Milk can be discussed as
Price of Milk (in ml) Quantity of Milk consumed

20 1000
30 666
40 500
50 400
60 333
Price of Milk
70
60
50
40
30
20
10
0
200 300 400 500 600 700 800 900 1000 1100
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 20, P2 = 30, Q1 = 1000, Q2 = 666
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 30, P2 = 40, Q1 = 666, Q2 = 500
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 40, P2 = 50, Q1 = 500, Q2 = 400
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 50, P2 = 60, Q1 = 400, Q2 = 333
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
6. Pizza
Pizza is a food item in any Bakery stores. The types of Pizza varies from the price of
Pizza. The below are few of the price of Pizza and the quantity of Pizza consumed
Price of Pizza Quantity of Pizza consumed

100 1
100 2
100 3
100 4
100 5
Price of Pizza
120
100
80
60
40
20
0
0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 5.5
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 100, P2 = 100, Q1 = 1, Q2 = 2
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
Price elasticity of demand = = = Infinity
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 100, P2 = 100, Q1 = 2, Q2 = 3
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 100, P2 = 100, Q1 = 3, Q2 = 4
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2
P1 = 100, P2 = 100, Q1 = 4, Q2 = 5
Q 2+ Q1
(Q 2−Q 1) /[ ]
A 2
B P 1+ P 2
(P 2−P 1) /[ ]
2

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INTRODUCTION

EFFECT OF ELASTICITY OF DEMAND

Price of Salt (in gms) Quantity of Salt consumed (in gms)

Percentage change∈the Quantity demand of Cooler

Price of Gold Quantity of Gold Demanded (in 10

Price of Milk (in ml) Quantity of Milk consumed

Price of Pizza Quantity of Pizza consumed

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