CHAPTER-6

FeIcE ELAST ICITY DEMAND

oNcEPT OF ELASTICITY OF DEMAND

Elasticn dokmad measues te
dhmanded a lommobt dages Aefomse to a change
any of its quantitatie determinants.
As ue knoy denand fer a Commolit inly dapuds fom s
income te lonuner and

by Elatit demand, we meaw etot to

denanded aacommodit, wttl

wdied tte commodit chags
Change in ts ouon or heome of te Vonume te
gods
demand is

Demand - teu elage

tla
is measogd luith seect to clauge
,tis alled fia elaitiat of ohnaud.
) Trome Elasticit 2euand'- aoken chage tn qatt, ceanded
it ik alhd Saeome ebitiaity enaud.
denaudae
4ore other it is allod Cros
Idemand
# Meanuy o RCE ELASTLCITy F DEMAND
Deaad is olafid aS a meawemet

dawandd lue to

clag tha
Commedilg
Demand ttl about
deand

# MeaauInDt ed bice Eastict d Jenand - PeecENTA GE - GacE

METHOD

elatais demard fer Comnodity -X ia maaurd

Amandd

E =(- laatg Clang in gantt, daanded

X loo
ihal denand
 = (-)
(

Ed = (-)

AP

danand
P= New Ptce

Eranpl (hatie Qusction)

Sfosig th ibal fria of ice cram is F4fa cf ad
tle Bitial demend for ie
pie o ia cheam
to tcufs. finol elatity t desand , aain
chang
methocl
 niy)) wnts
guautby
thaa 2o pice
areate bys
Ae
(-)x h the
Concue
X3,
2)
-(lfps
4-) 6> to7,
Callat
=
3ubs (
the
4 2 = =) changes
(Ea) =6 isS,
wnits.
sie)=
=
Poice) paice
damand gool 12
P(itial
PCes aden to 2
of a changes
Elastiuih gocl.
goocl·
(sia
(Qitl
dauwaua) pclasclmethodl
Hee wdentlat
f
Q:2
 to )(rataye #
feean
Considna
is chaugeis shaldity ) as toises Two
6) elatiitiesa)
onsidertoo
Cofoa
ahew; 'caye?
goods hanleye etinatry
guetions
Thue peeutge
heeans
demand
fim Pria demand Prie tiro
CRITICA
becomes Critiad -
f Ede ofillustbatieny tnge clange
tate aeassgoods(Cains
a latit Chauge
clais Chang qet L
difslt clange
), ane QueSTIONS
cleeaw fron of ( be
metonhod
incaeasts aguanlty aseed
wdesas
damand Aattu
tlen is s
So ot
fom to aud Confaison not faafd tien
2 omTasles) Considna aud abslt and
mcamig
chaits n se
lo f hie tt
, to elaay lor be
elastiiy
be
iflensidesed qationchange)
20) absolut Condeed
of
o
anol (fomala) dad
3)
as
 danad is hedd
ths that n ae of chairs
Aiken pva is doubh, ad s Gae of tables , demarel
is deuble wtan pe is keduced to half

is cons idesd ) we Can

stat the etth lke ti,

tht 1/. chaye sa fie lecs to 0s. chang
in demard Lor
demand or chaihs
tables

NoTE
Can ofChains and

tably tan bn Ge
Case d cdains 7hs ofoison seem

to be meaningfl.

Sstinátig fastiab of deaad ?

Ed= (-) A&
AP
xP
&
P

refir te miny
 -2
demend behind
elastiit negatieCotirt elastiityHouever y agatie
usll be Cre qhantty De
alnys adile
tis ange
clcieetion to
o elastieit f o regatie
foud xelatinshib
elastiib Con
udard tis
te
denand te
veg,tien atll
to Conteet conVent Ed=
price
be isJust -5
elastu,
AP
be aad
t e contae
bten t e So. latiandib
fos ofthat onal sitiie po
itive. t iu mins minuselastut, X guantit
as So x o
-t) E to LQ P
ie matiemtially inote2 damand and
-t)xl=2
e y and say o Late o betiten
ta -2 -2¢ thet mill
gautit Jut dmand than te
Coftiieut 7hi , could wll
aluaysehange
incliiates (-2). a'
-3 brcie
2. . becse s,-3 ot be
The e
oauord shass lesses ; negatie
f hatonale
elatut e in
tlis teghu tan
 f SLoPE OE DNhNND CURVE AND ELASTECI TY OF DEMAND

Denand
ditherent (oncelt- e basie ditlane it as folos.
(or abcolt ag)
denandd a ielatio t abslt cg

demande a selati to soe

’ ets ndastd the difacne ith

3o

frce
(Riel gatt
D
AQ=De lo
fou 2o to 3o)
1o

20 30
 that lows had other
ted late is
is AQHere
the kile i)
that fhd
=3
30 X
slase
I (-) =
AP
x A& (-) =
(at
fpoint Deaad
c) Elatit,o
that 3hows 1
 olitnet situations f elastiity of aaand
Thene ane te pes demand Cutes
diitinet ty
with heence to ttee

Saight Cine Denaad Case and ibaslaaly%

) Hoalzontal sthaskt ne Demand cuve is
- A
Denaxd tHozontel
Elastic Denand asve
Knon as
*poty
4 is a Aitation cshea Sall clangt
in its demand.
orie f Cowmed
Causes an finut changt
hus a small tie Sa
lstits tlis sitation. klastec Dbiacd (4-o)

-D
Cwrve parallel o x-ais

to Zeso.
At tle
deandd n be 10, 20, 30 or
10 20 Ro

ament f t Crnmodit. Mene Ouandt (uasts)

sloe of toni coral stragit lne= 0

Ed.
edigy, Elastiig to venticalstrest
relastie A
R6 It SETHTZON2:
t6 is
a
f
demaudeol
guautit is situti Demand
Ee ckuad 2i
?2
at 3. Vestial
2 Cve
is demand 6
any 7 shen denand
arveie
foint Zno
2 St stsuykt
(o
hemarng is
shous
E lnts 4
=o) D le
X lontent atOustty that
paie Cuve
den
t
knoon as
i
lust) (ass =0.
(3) and
tenits. (E=o) n0 llasbu,
to7ies
Hene
any
7ITUA TION 3 Reetargtat tyfestala Drard lue
Flastito of Deaahd

Asectanglas Hubeubla ii a Cve ndea

a dicd all etqa
ane
ras are egualTt esd e fanylaa
It needs t be nehd thateh
auea ndes dammand uve clas total enpenditxa
Conmodity (Bal enpdihae = Pxa)
Thuy, den demand cave is total
renains Contant,no mots pia
tie Conaedity henaes or ducrea set.
lt is a sitation Unitay elautie Denand:
Shos tis sitiattom
Reetanyuan ybobola Deaad Cave
Alea OpTB = ha ol JE

Cotat, no wati dat le tie)

Lemand Cae is hetala hyubla. E=lt ay

Constent to inceae o1 deeae
 3) 2)
btitut to
s
sueb eack
AvailaAlt Lauriesdemand. #
demasd.
byhtingelastie Melt helaste cloe buad
Sabslaut t, Jenty Aameut matebos, totkook, actons atas
otle)
suttitts
a las amea
dananol.uea- geod is not dnanded
ly ,lihe Sone Affeating
hoom- Jeladiel inCheaseol. ek,
suses 4 ascd
ad
sbtituts hae an- as f
aatig,lcbit, Ghods (lke ce goods endei: th
, Conditoyek
ta th lm, ,a elaste seasonal Snforut Brce
di lomsunes
ir is
and i- demand oulinanly dnand
nelihion anGau Dunaud
loye , Elstat
brad Cotlyveyetsles dtminaat
necessauiesdetuminaat
earticty
pae
eraule: be
ft hare being if shos
ing) for aud fomite
foods t lka enand
Coo ymltisla to e lattin,
a ete
stion demand modleate On
t have salt,
ete ae dich pea faslinable )
ff ol, Uhios
have foelaitius an inelastie
tny
 be setietd to

dinand s

lostboneneut Uses: Demand utl be elaste rgoods

Javideutial-heus
demand Resideial hoes, ake tet ats on tte laas

alio dauds
Aodiyy
lous
diand is ebee tid to be
Caw by te mutti- billlon axies

mall cas b the midle cas

tatit asmes - hoo ds to td Coswwmess keeme
habrtuated (or addietael ) ill have salastie denand.
eranply
Cjautt anod liyo dees not Aedue
 Scooter
lb
dinand.
theelaste CtToeioot ( Sn
pat is line onsumeo -past
lete)
thick
elastiea peod
tdsfd Consema
,
i- msbobes,
ng
loDeand have
a An
aye sseu
bevoed elastie te
is
sotetion a
othu boet-
. denend.
ItiiSuelastie haned polia ell
baca d
tiis te
ncome l
,
lon ave inLnetais
(t,
an