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    Md. Mohiuddin Rownak
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    This document discusses three types of elasticities: price elasticity of demand, income elasticity of demand, and cross elasticity of demand. Price elasticity of demand measures how responsive quantity demanded is to changes in price. Income elasticity of demand measures responsiveness to changes in consumer income. Cross elasticity of demand measures responsiveness of one good's quantity demanded to changes in the price of another good. The document provides examples of calculating own price, cross price, and income elasticities using data on soybean oil and loose oil prices and quantities demanded over time.

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    Ch-5

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    This document discusses three types of elasticities: price elasticity of demand, income elasticity of demand, and cross elasticity of demand. Price elasticity of demand measures how responsive quantity demanded is to changes in price. Income elasticity of demand measures responsiveness to changes in consumer income. Cross elasticity of demand measures responsiveness of one good's quantity demanded to changes in the price of another good. The document provides examples of calculating own price, cross price, and income elasticities using data on soybean oil and loose oil prices and quantities demanded over time.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    3 views7 pages

    CH 5

    Uploaded by

    Md. Mohiuddin Rownak
    This document discusses three types of elasticities: price elasticity of demand, income elasticity of demand, and cross elasticity of demand. Price elasticity of demand measures how responsive quantity demanded is to changes in price. Income elasticity of demand measures responsiveness to changes in consumer income. Cross elasticity of demand measures responsiveness of one good's quantity demanded to changes in the price of another good. The document provides examples of calculating own price, cross price, and income elasticities using data on soybean oil and loose oil prices and quantities demanded over time.

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    © All Rights Reserved
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    of 7

    LECTURE NOTES

    Avijit Mallik
    Assistant Professor
    IBA,DU
    ELASTICITIES
    Salvatore#5
    Elasticity
    ■ Responsiveness of consumers to a change in
    a product's price is Price Elasticity of
    Demand
    ■ The income elasticity of demand is the
    • Price Elasticity of Demand responsiveness of the quantity demanded for
    a good to a change in consumer income.
    • Income Elasticity of ■ The cross elasticity of demand measures
    Demand the responsiveness of the quantity demanded
    for a good to a change in the price of another
    • Cross Elasticity of Demand good.
    Price
    Elasticity of
    Demand

    • Point Elasticity of Demand


    • Arc Elasticity of Demand
    Income
    Elasticity of
    Demand
    • Ey/I = +ve (normal)
    • Ey/I = -ve (inferior)
    • Ey/I > 1 (luxury)
    • Ey/I < 1 (necessity)
    Cross
    Elasticity of
    Demand
    • Ex,y > 0 (x,y are
    substitutes)
    • Ex,y < 0 (x,y are
    Complements)
    Calculate own price, cross price &
    Income Elasticity

      Feb-21 Feb-22

    Price of Soyabean Oil per liter 135 Taka 168 Taka

    Quantity of Soyabean Oil demanded 5 liter 4 liter

    Income(monthly) 12187.5 Taka 12600 Taka

    Quantity of loose oil demanded 1 liter 1.5 liter

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