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Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
Basics of Economics ...
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Basics of Economics ...

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  • 1. Elasticity of Demand By Jerry Jose PGD(BA)
  • 2. Ceteris- paribus <ul><li>It is a Latin term which means that …. </li></ul><ul><li>Except Demand and price all other things like .. Income,Trends,Population,Scarcity,Season etc. will remain the same … </li></ul>
  • 3. What is Elasticity ? <ul><li>Elasticity is a tool that measures the responsiveness of the quantity demanded of a good to its price . </li></ul>
  • 4. Kinds of Elasticity…. <ul><li>Price Elasticity of Demand </li></ul><ul><li>Cross-Price Elasticity of Demand </li></ul><ul><li>Income Elasticity of Demand </li></ul>
  • 5. Perfect Inelastic Demand…. <ul><li>No Matter what the price of the good is the demand will be the same </li></ul>
  • 6. Examples….. Salt.
  • 7. Perfect Elastic Demand…. <ul><li>A fractional change in the price may bring about huge change in the Quantity of demand. </li></ul>
  • 8. Examples…. Soap. Wada pav Tea & Coffee
  • 9. Unitary Elasticity… <ul><li>Inverse change in Qty. demand on price will be proportional if price increases. </li></ul>
  • 10. Example…. Fruits & vegetables
  • 11. Relative Elastic Demand…. <ul><li>When importance of any commodity is understood the necessity is also there. </li></ul>
  • 12. Example…. Vaccination Medicines Cure for AIDS
  • 13. Relatively Inelastic Demand…. Phenomenal change in price will not make change in demand.
  • 14. Examples…
  • 15. How to calculate Elasticity ? <ul><ul><li>Percentage change in quantity demanded </li></ul></ul><ul><ul><li>= ------------------------------------------- </li></ul></ul><ul><ul><li>Percentage change in price </li></ul></ul>
  • 16. <ul><li>Q & A </li></ul>
  • 17. Thank You !!!

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