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demand and their types and Elasticity_of_Demand_Presentation.pptx
- 1. Elasticity of Demand UnderstandingHow Demand Responds to Economic Changes Presented by ChatGPT
- 2. Introduction to Elasticity •Elasticity of demand measures how quantity demanded changes in response to changes in price or other factors. • Key types: Price Elasticity, Income Elasticity, and Cross Elasticity.
- 3. Types of Elasticityof Demand • 1. Price Elasticity of Demand (PED) • 2. Income Elasticity of Demand (YED) • 3. Cross Elasticity of Demand (XED)
- 4. Price Elasticity ofDemand (PED) • Definition: Measures % change in quantity demanded to % change in price. • Formula: PED = % Change in Quantity Demanded / % Change in Price • High PED (>1): Elastic | Low PED (<1): Inelastic | PED = 1: Unitary
- 5. Graphical Representation ofPED • Perfectly Elastic: Horizontal demand curve • Perfectly Inelastic: Vertical demand curve • Normal Elastic: Downward sloping curve with varying slope
- 6. Determinants of PED •1. Availability of substitutes • 2. Necessity vs. luxury • 3. Proportion of income spent • 4. Time period considered
- 7. Income Elasticity ofDemand (YED) • Measures how quantity demanded changes with income changes. • YED > 0: Normal goods | YED < 0: Inferior goods • Helps in understanding consumer behavior with rising income.
- 8. Cross Elasticity ofDemand (XED) • Measures how demand of one good changes with the price of another. • XED > 0: Substitutes | XED < 0: Complements • Example: Tea and Coffee (substitutes), Pen and Ink (complements)
- 9. Applications of Elasticity •1. Business pricing strategies • 2. Government taxation policy • 3. Revenue estimation • 4. Forecasting market reactions
- 10. Summary • Elasticity helpsunderstand consumer sensitivity to economic changes. • Useful for pricing, policymaking, and strategic decisions. • Includes PED, YED, and XED for different economic analyses.
- 11. Any Questions? • Feelfree to ask for clarifications or examples on any topic.
- 12. Thank You! • Presentationby ChatGPT. • We hope you now have a better understanding of Elasticity of Demand.