this ppt help u to understand elasticity of demand....Full description
Full description
Economics demand elasticityFull description
Full description
Full description
Full description
Full description
Full description
Full description
aaaaa
it shows demand how changes into elasicitiyFull description
type of elstyFull description
Full description
Quick revision for iit jee physics chapters
ukkuh
elasticity
Descripción completa
Elasticity Chapter of Physics Class XI Non Medical
Full description
Presentation On
ELASTICIT Y OF DEMAND
Definition Of Price Elasticity Of Demand • The change in the quantity demanded of a product due to a change in its price is known as Price elasticity of demand. Thus, the sensitiveness or responsiveness of demand to change in price is as called elasticity of demand
Kinds Of Price Elasticity Of Demand 1)Perfectly elastic demand 2)Relatively elastic demand 3)Elasticity of demand equal to utility 4)Relatively inelastic demand 5)Perfectly inelastic demand Let Us See Some Views On Them
Perfectly elastic demand
y
Perfectly elastic demand curve
P R I C
D
E
0
D
Whe When n the the dema emand for a product changes – incre increas ases es or decreases even even when when there is no chan change ge in price, it is kno known as x perfect elastic
Relatively elastic demand y P
Relatively elastic demand curve
R D
I C E
D
0
demand
x
Whe When n the the proportionate chan change ge in dema demand nd is more than the proportionate chan change ges s in price, it is know known n as relatively elastic demand.
Elasticity of demand equal to utility y D
P R
Elasticity of demand equal to utility curve
I C E
D 0
demand
x
Whe When n the the proportionate chan change ge in dema demand nd is equa equal l to proportionate chan change ges s in price, it is know known n as unitary elasti elastic c demand demand
Relatively inelastic demand Y D
Relatively inelastic demand curve
P R I C E D O
demand
X
When When the proportionate chan change ge in dema demand nd is less than the proportionate chang changes es in price, it is know known n as relatively inelasti inelastic c demand demand
Perfectly inelastic demand Y D
P R I C
Whe When n a chan change ge in pric price e, hows howsov over er Perfectly inelastic larg large e, chan change ge no demand curve chang changes es in quality quality demand demand, it is known as perfectly inelast inelastic ic demand demand
E
0
D demand
X
SHOWN IN ONE DIAGRAM AS FOLLOW Y
P R I
D
C E D3 D4 0
D5 DEMAND
WHERE D1) Perf Perfec ectl tly y elas elasti tic c demand D2)Relativ Relatively ely elastic elastic D1 demand D3)Elast Elastici icity ty of D2 dema demand nd equa equal l to utility D4)Relatively inelast inelastic ic demand demand X D5)Perfectly Perfectly inelast inelastic ic demand
Measurement Of Price Elasticity Of Demand There are main methods like 1.Percentage method or proportionate method 2.Total 2.Total outlay method method or total revenue method 3.Geometric method or point method 4.Arc elasticity of demand
Factors Affecting Affecting Price Elasticity Of Demand Nature of the Commodity Availability of Substitutes Variety of uses of commodity Postponement Influence of habits Proportion of Income spent on a commodity • Range of prices • • • • • •
Factors Affecting Affecting Price Elasticity Of Demand • Income Groups • Elements of time • Pattern of income distribution •
Practical Practical Importance of the Concept of Price Elasticity Of Demand
• The concept is helpful in taking Business Decisions • Importance of the concept in formatting Tax Policy of the government • For determining the rewards of the Factors actor s of Production • To determine the Terms of Trades Between the Two Countries
Practical Practical Importance of the Concept of Price Elasticity Of Demand
• Determination of Rates of Foreign Exchange • For Nationalization of Certain Industries • In economic Analysis ,the concept of price elasticity of demand helps in explaining the irony of poverty in the midst of plenty.
Types Of Incom Income e Elastic Elasticity ity Of Demand • Positive Income elasticity of demand • Negative Income elasticity of demand Zero Income elasticity of demand • Zero
demand
D
P A e
D
m o c n I
O
Q u a n tity
B
S
X
Positive Income elasticity of demand • Income Elasticity Equal to Unity or One • Income Elasticity Greater Than Unity Or One • Income Elasticity Less Than Unity or One
demand e c i r P
P
A
Total Revenue B
S
Quantity Demanded (000s)
Zero Income elasticity of demand Y D
O
D
Quantity Demanded
X
All Income Graphs Representation
Measurement Of Income Elasticity Of Demand
+
Measurement Of Income Elasticity Of Demand • Here , ∆q = Change in the quantity demanded. Q = Original quantity demanded. ∆y = Change in income. Y = Original income. • For e.g. ,when Income of the consumer = 2,500/- , he purchases 20 units of X, when income =
Measurement Of Income Elasticity Of Demand • Thus Income Elasticity of Demand + =
= (5/20) + (500/2500) = 1.5 therefore here the IED is 1.5 which is more than one.
Factors Affecting Affecting Income Income Of Of Demand Income Itself Itself Only. Only. • Income • Price Of the Commodity
Importance Of the Concept of Income Elasticity Of Demand • In production planning and management • In forecasting demand when change in consumers income is expected • In classifying goods as normal and inferior • In expansion and contraction of the firm by the figure of income elasticity of demand
Elasticity Of Substitution • The selection between two product or thing is called substitution substitution • So Elasticity of Substitution measures the rate at which the particular product is substituted . • Thus EOS is the degree to which one product could be substituted in context of price and proportion •
Elasticity Of Substitution Substitution • Elasticity of Substitution = Proportionate change in the quantity ratios of goods x & y DIVIDED BY Proportion Proportionate ate change in the price ratios of goods x & y.
Types of Elasticity Of Substitution • Zero Elasticity of Substitution. Substitution • Infinite Elasticity Of Substitution • Elasticity of Substitution greater than unityor1 • Elasticity of Substitution is equal to one • Elasticity of Substitution is less than one
Types of Elasticity Of Substitution on Graph
Re at ons p Between Pr ce Elasticity, Elasticity, Income Income Elasticity Elasticity and Substitution Elasticity • As Price is depended on income and substitution effect similarly Price Elasticity is depended on Income Elasticity an Substitution Elasticity . • These relationship can be represented represented by • Ep = Kx E1 + ( 1 – Kx ) es
r ce e as c y o eman depends on: • Proportion of income spent on particular good say X. • Income elasticity of demand. substitution. • Elasticity of substitution. • Proportion of income spent on product other than X. •
Cross Elasticity of Demand • Cross elasticity of demand express a relationship between the change in the demand for a given product in response to a change in the price of some other product • E.g. if the X tea demand reduces tremendously tremendously than it effect could be seen in demand of sugar and
Types of Cross Elasticity of Demand • Cross Elasticity of Demand Equal to Unity or One • Cross Elasticity of Demand Greater than Unity or one • Cross Elasticity of demand less than unity or one
Measurement Cross Elasticity of Demand
Cross Elasticity of Demand For Substitutes
Cross Elasticity of Demand For Complementary Products
Cross Elasticity of Demand For Neutral Products
Importance of Cross Elasticity Of Demand • The concept is of very great importance in changing the price of the products having substitutes and complementary goods . • In demand forecasting • Helps in measuring interdependence of price of commodity . • Multiproduct firms use these concept to measure the effect of change in
