Prepared By:-
KVS, Delhi Region
FACTORS AFFECTING ELASTICITY
OF DEMAND
Prepared By:-
KVS, Delhi Region
DEFINITION
• It is defined as proportionate change in
quantity demanded to proportionate
c...
Prepared By:-
KVS, Delhi Region
FACTORS AFFECTING ELASTICITY OF
DEMAND
• Nature of commodity
• Availability of close subst...
Prepared By:-
KVS, Delhi Region
Nature of commodity
• Necessities - Less elastic
• Comforts - Elastic
• Luxuries - More el...
Prepared By:-
KVS, Delhi Region
2) Availability of Close Substitutes
• Good having number of close substitutes will
have a...
Prepared By:-
KVS, Delhi Region
NUMBER OF USES
• More the number of uses a commodity can be
put to- More elastic is the de...
Prepared By:-
KVS, Delhi Region
PROPORTION OF TOTAL EXPENDITURE
SPENT ON A COMMODITY
Larger the proportion of total expend...
Prepared By:-
KVS, Delhi Region
LEVEL OF INCOME
• Higher the level of income, lower the elasticity
of demand and vice vers...
Prepared By:-
KVS, Delhi Region
HABIT
• If you are habituated to a particular good,
elasticity will be less and vice versa.
Prepared By:-
KVS, Delhi Region
TIME PERIOD
• During short period most of the commodities
are having less elasticity of de...
Prepared By:-
KVS, Delhi Region
Questions for self-evaluation
• What is price elasticity of demand?
• Which has greater el...
Prepared By:-
KVS, Delhi Region
Mrs. Anita Bhardwaj KV,
Vigyan Vihar
Mrs .Monika Bajaj KV, Tagore
Garden
Mrs. Leena Sin...
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Factors affecting elasticity of demand

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Factors affecting elasticity of demand

  1. 1. Prepared By:- KVS, Delhi Region FACTORS AFFECTING ELASTICITY OF DEMAND
  2. 2. Prepared By:- KVS, Delhi Region DEFINITION • It is defined as proportionate change in quantity demanded to proportionate change in price . • Price elasticity of demand measures the responsiveness of demand of a commodity to a change in its price .
  3. 3. Prepared By:- KVS, Delhi Region FACTORS AFFECTING ELASTICITY OF DEMAND • Nature of commodity • Availability of close substitute • Number of uses • Proportion of total expenditure spent on the product • Level of income Income of consumer • Habit • Time period
  4. 4. Prepared By:- KVS, Delhi Region Nature of commodity • Necessities - Less elastic • Comforts - Elastic • Luxuries - More elastic
  5. 5. Prepared By:- KVS, Delhi Region 2) Availability of Close Substitutes • Good having number of close substitutes will have an elastic demand • Good with no close substitute will have an inelastic demand
  6. 6. Prepared By:- KVS, Delhi Region NUMBER OF USES • More the number of uses a commodity can be put to- More elastic is the demand and vice versa.
  7. 7. Prepared By:- KVS, Delhi Region PROPORTION OF TOTAL EXPENDITURE SPENT ON A COMMODITY Larger the proportion of total expenditure spent on a good higher will be the elasticity and vice versa.
  8. 8. Prepared By:- KVS, Delhi Region LEVEL OF INCOME • Higher the level of income, lower the elasticity of demand and vice versa.
  9. 9. Prepared By:- KVS, Delhi Region HABIT • If you are habituated to a particular good, elasticity will be less and vice versa.
  10. 10. Prepared By:- KVS, Delhi Region TIME PERIOD • During short period most of the commodities are having less elasticity of demand. • In the long run when substitutes are available demand for the goods will become more elastic
  11. 11. Prepared By:- KVS, Delhi Region Questions for self-evaluation • What is price elasticity of demand? • Which has greater elasticity-luxuries or necessities? • When is the demand of a commodity called elastic? • What will be the elasticity of demand if it has close substitutes? • Why is the demand for water inelastic?
  12. 12. Prepared By:- KVS, Delhi Region Mrs. Anita Bhardwaj KV, Vigyan Vihar Mrs .Monika Bajaj KV, Tagore Garden Mrs. Leena Singh KV, AGCR Mr. Sri Keshav KV, no.2 Delhi Cantt Mrs .Ritu Tanwar KV, AFS Rajokri Compiled by:-
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