Welcome

Presented By –
v111 - Sagar Sonawane.

v112 – Tanaji Tandale.

v113 – Jivan Tawade.

v114 – Vishal Tawar.

v116 – Manish Tayade.

v117 – Rashmi Thakare.

v118 - Avinash Thorat.

v119 - Jalandar Thube.

v
 What is Elasticity of Demand ?

It explain the magnitude of impact

of changes in the factor
influencing demand on the quantity
demanded.
Elasticity    
of% =



Change in Quantity Demanded
Demand

  %Change in Invariants Affecting Demand
Factors affecting the elasticity of
demand
 Number of Substitute .
 Price Level of Commodity.

 Position of Commodity in the

 Consumer’s Budget.
 Joint Demand.

 Consumer Behaviour.

 Nature of Commodity .

 Number of Uses of Commodity.

X
Types of elasticity of demand
 Price Elasticity of Demand.

 Income Elasticity of Demand.

 Cross Elasticity of Demand.

 Promotional Elasticity of Demand.

 Arc Elasticity of Demand.

 Price elasticity of demand
 Demand of Commodity Falls or Rises due to Falls or
Rises in Price of Produce.


     %of Change
Elasticity = in Quantity Demanded
Demand
         %  Change in Price


 Ei =    q  x P
 Case Study –     p  Q 
 As the Price of Groundnut Oil Increase
 from Rs.60/- to Rs.90/-. The Demand for the
Groundnut Oil Falls Down.
 Same due to Decreased in the
 Prices of Laptops the Sale of Laptops
 Increased.
 Nature of price elasticity of demand
 Price elasticity of demand is perfectly inelastic if Elasticity of Demand is
Zero (0).
 Price elasticity of demand is perfectly elastic if Elasticity of Demand is
∞.
 Price elasticity of demand is relatively inelastic if Elasticity of Demand is
less than one (1).
 Price elasticity of demand is relatively elastic if Elasticity of Demand is
greater than one (1).
 Price elasticity of demand is unitarily elastic if Elasticity of Demand is
METHODSOF MEASUREMENT OF 
equal to one (1).



PRICE ELASTICITY OF DEMAND.  


 % or Arithmetic Mean Method.

 Total Expenditure or Total Outlay Method.
 Income elasticity of demand
 Change in Quantity Demanded due to the Change in
Individuals Income.


 Luxury – If 1 < Ei.

 Normal – If 0-1 = Ei. Ei =   q  x Y             
   y  Q
 Inferior – If 0 > Ei.
y 

•

Quantity 

   + ve 

­ ve


zero 

y1 x
y2
Inc o me  
 Cross elasticity of demand
 Demand Of One Good Affected Due To Change In
Price Of Other Good.


 Elasticity% of
Change
   = in Quantity Demanded of ‘ 1st pro

 Demand (ec  % 
) Change in price of ‘other product’

E =    q x   x  Py  
    p y  
c
 Case Study – Q x 
 In Present Days the Price of 1 Kg of Meat
is Rs. 250/- & the Price of 1 Kg of Chicken is Rs.
140/-. So, the Demand for Meat Falls Down and
the Demand for Chicken Suddenly Increased.

 Promotional elasticity of

demand
The change in demand of product due to change in
promotional expenses.


  %  of
Elasticity
 Change
    in the Quantity Demanded of Comm
Demand (  %
 ea)   Change
= in Promotional Expenditure on
commodity   q   E     

Ea = X  p
    e p Q 


 Case Study –
 After ‘Sachin Tendulkar’ Promoted the
‘BOOST’ the Demand of ‘BOOST’ is Suddenly Expanded.
 arc elasticity of demand
 The elasticity of demand for a commodity over
period of time on account of the change in
its price.

D
Price 

D1

0 x
Quantity
 Importance of elasticity of
demand
 Business Decisions.
 Economic Policies of the Govt.
 Determination of Public Utilities.
 Taxation Policy.
 Determination of Factor Pricing.
 International Trade.
