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Basics of Economics ...

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  • 1. Elasticity of Demand By Jerry Jose PGD(BA)
  • 2. Ceteris- paribus
    • It is a Latin term which means that ….
    • Except Demand and price all other things like .. Income,Trends,Population,Scarcity,Season etc. will remain the same …
  • 3. What is Elasticity ?
    • Elasticity is a tool that measures the responsiveness of the quantity demanded of a good to its price .
  • 4. Kinds of Elasticity….
    • Price Elasticity of Demand
    • Cross-Price Elasticity of Demand
    • Income Elasticity of Demand
  • 5. Perfect Inelastic Demand….
    • No Matter what the price of the good is the demand will be the same
  • 6. Examples….. Salt.
  • 7. Perfect Elastic Demand….
    • A fractional change in the price may bring about huge change in the Quantity of demand.
  • 8. Examples…. Soap. Wada pav Tea & Coffee
  • 9. Unitary Elasticity…
    • Inverse change in Qty. demand on price will be proportional if price increases.
  • 10. Example…. Fruits & vegetables
  • 11. Relative Elastic Demand….
    • When importance of any commodity is understood the necessity is also there.
  • 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 ?
      • Percentage change in quantity demanded
      • = -------------------------------------------
      • Percentage change in price
  • 16.
    • Q & A
  • 17. Thank You !!!