The document discusses elasticity of demand and factors that determine it. It explains relatively elastic, inelastic, unitary, and perfectly elastic and inelastic demands. Relatively elastic demand occurs when price changes lead to more than proportional changes in quantity demanded. Relatively inelastic demand is when price changes lead to less than proportional changes in quantity demanded. Factors like necessity of a commodity, availability of substitutes, income level, proportion of income spent, and durability determine elasticity. It also discusses demand shifts caused by changes in income, tastes, population.

1. Demand Analysis
 Elasticity of Demand
- Relatively elastic demand – where a change in
price leads to more than proportionate change
in demand.
Ed>1

2. Demand Analysis
 Relatively inelastic demand
- where a change in price leads to less than
proportionate increase in demand.
Ed<1

3. Demand Analysis
 Unity elastic
- where a given proportionate change in price
leads to proportionate change in demand.
Ed = 1

4. Demand Analysis
 Perfectly elastic demand
- where a small change in price leads to big or
infinite change in demand

5. Demand Analysis
 Perfectly Inelastic
- where a change in price causes no change in
quantity demanded.

6. Demand Analysis
 Factors determining the Elasticity of demand.
i) Nature of the commodity – The demand for
necessities is generally inelastic because the
consumption of necessary article does not
change significantly with the change in the
price.

7. Demand Analysis
ii) Range of substitutes
- A commodity having number of substitutes
has relatively elastic demand because if its
price rises its consumption can be curtailed in
favour of its substitutes.

8. Demand Analysis
iii) Income level
People with high income are less affected
than the people with low income.

9. Demand Analysis
 iv) Proportion of income spent on the
commodity.
When a person spends only a small part of his
income on the commodity price changes does
not affect his demand for the commodity.

10. Demand Analysis
 Durability of the commodity
- In case the commodity is durable or
repairable, if the price rises considerably, one
is likely to use the commodity for a longer
period.

11. Demand Analysis
 Demand Shifts.
In economics a shift in demand means an
increase in demand or decrease in demand at a
given price level.
- An increase in demand means that at the same
series of prices as before,increased quantities
are demanded.

12. Demand Analysis
 Factors that causes shifts in the demand
- Change in income
- Change in tastes,preferences,fashion
- change in population