Elasticityof demand is defined as the responsiveness of the quantity of a good to changes in one of the variables on which demand depends- Price of the commodity Income of the Consumer Various other factorDEFINATION-’’The elasticity of demand measures the response of the demand for the commodity to change in price”.
Itexpress the response of quantity demanded of a good to a change in its price Price elasticity of demand called Elasticity of demand as, price is the most important determinant of demand.
The degree of responsiveness of the demand for the commodity to a change in the income of the consumer. It is defined as Ratio of percentage change in the quantity demanded of a commodity to the percentage change in the income of consumer
The degree of responsiveness in the demand for one good to the change in the price of the other good (Substitute or complement) It is as changed in the price of one good causes a change in the quantity of the other good.
Elasticityat different points on a demand curve is different. There are demand curve which have the same elasticity through out their length. Perfectly Elastic Demand curve Perfectly Inelastic Demand curve Unitary Elastic Demand Curve
Horizontal straight line demand curve Demand may increase or decrease to any extent irrespective of no change in the price.
Vertical Straight line demand curve There will be no change in demand take place due to change in its price. Elasticity of demand is Zero
It is a Rectangular hyperbolic demand curve When change in price brings about exactly proportionate change in the quantity demanded. It means (price*quantity) does not change with the change in price.
NATURE OF THE COMMODITY Necessities and prestige NUMBER OF SUBSITUTES Tea city to- Brook bond tea NUMBER OF USES OF A COMMODITY Electricity- Heating, cooking, Lighting JOINT DEMAND Petrol and car
POSITOIN OF COMMODITY IN THE CONSUMER’S BUDJET Salt, Soap, Ink URGENCY Medicines CONSUMER’S BEHAVIOUR Tobacco, Alcohol, Drugs