Business management

1. SUBJECT PRESENTATION OF BUSINESS ECONOMICS
SARASWATI VIDYA MANDIR MAHILA MAHAVIDYALAYA
Faculty:-
Simran Gupta
Presented by:-
Harshita Narang
Roll no - 2315137540004
B. Com 2nd sem 2022- 2023

2. CONTENT
➢ Introduction: Demand
➢ Elasticity of demand
➢ Importance of elasticity of demand
➢ Types of elasticity of demand
➢ conclusion

3. Introduction
Demand: The demand is refers to the purchasing power of the
consumer with willingness and desire to buy goods and
services at different prices.
Law of demand: The law of demand states the inverse relation between
the price and the quantity demand. When the price of
commodity increase the quantity demanded for itwill
decrease and when the price of commodity decrease, its
quantity demand will increase and the condition is all
other factors of demand remains unchanged.

4. CONCEPT OF ELASTICITY OF DEMAND
The elasticity of demand
refers to " the
responsiveness of quantity
demanded with the change
in price .

5. IMPORTANCE OF ELASTICITY OF
DEMAND
❖ Used in formulating governmentpolicies especially taxation policy.
❖ Helps the business to fix the price of their product.
❖ Helps in maximising profit.
❖ A business can allocate its costof production when itknow
the price elasticity of demand.

6. TYPES OF ELASTICITY OF DEMAND
The demand is not a absolute
term but a relative
term .Whenever we study
anything regarding demand we
will relate it with its
determinants or factors.
Types of elasticity of demand
1. Price elasticity of demand
2. Income elasticity of demand
3. Cross elasticity of demand

7. PRICE ELASTICITY OF DEMAND
The price elasticity of demand is
commonly called elasticity of
demand. It may be defined as
"The rate of change in quantity
demanded when there is some
change in the price of the goods".
Price Quantity
The formula of price
elasticity of demand:-
Ep = Δq × Δp
p × q

8. CLASSIFICATION OF PRICE ELASTICITY OF DEMAND
Types of price
elasticity of
demand is also
called " degree
of demand "

9. PERFECTLY ELASTIC DEMAND
Perfectly elastic demand is
defined as "The situation where
a little proportionate change in
price of the commodity leads to
infinite change in its quantity
demanded".
Here, Ed = ∞
Price
Quantity
perfectly elastic

10. PERFECTLY INELASTIC DEMAND
Perfectly inelastic demand refers
to"The situation where the
proportionate change in the price of
the commodity does not affect the
quantity demand of it. "
Here, Ed = 0
Perfectly
inelastic

11. RELATIVELY ELASTIC DEMAND
It refers to that situation where
relative change in quantity demanded
for the commodity is greater than
relative change in it's price. Elasticity
of demand here is said to be greater
than Unity.
Ed>1
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12. RELATIVELY INELASTIC DEMAND
It refers to that situation
where the relative change in
quantity demanded for
commodity is less in
comparison to relative change
in price of it. The elasticity of
demand here is said to be less
than Unity.
Ed<1
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13. UNITARY ELASTIC DEMAND
It is the situation where the
proportionate change in price of
commodity is equal to the
proportionate change in quantity
demanded of it. Here, the elasticity of
demand said to be equal to one.
Ed = 1
Unit elasticity

14. INCOME ELASTICITY OF DEMAND
Itmay be defined as the
ratio of proportionate
change in the quantity
demanded of commodity to
the proportionate change in
income of the consumer
Ei= ∆q/∆y × y / q
The formula for calculation of
income elasticity of demand

15. TYPES OF INCOME ELASTICITY OF DEMAND
1. Zero income elasticity of demand
2. Negative income elasticity of demand
3. Unitary Income elasticity of demand
4. Income elasticity of demand greter than unity
5. Income elasticity of demand greater than unity

16. 1.ZERO INCOME ELASTICITY OF DEMAND
This refers to the situation where are given increase in consumers money
income does not result in any increase in the quantity remanded of the
commodity
it is expressed by Ei=0
2.NEGATIVE INCOME ELASTICITY OF DEMAND
This refers to that situation where are given increase in the consumers money income is
followed by an actual fall in the quantity demanded of the commodity.
It is expressed by Ei<0

17. 3.UNITARY INCOME ELASTICITY OF DEMAND
This refers to the situation where the proportion of the change in consumer income is
the same proportionate change in quantity demanded.
It is expressed by Ei= 1
4.INCOME ELASTICITY OF DEMAND GREATER THAN UNITY
It refers to the situation where proportionate change in the amount of a product
demanded is higher than the change in consumer income in due proportion..
It is expressed by Ei>1

18. INCOME ELASTICITY OF DEMAND LESS THAN ONE
If the change in the amount of a product demanded in due proportion is
less than the change in consumer income in due proportion, positive
income elasticity of demand will be less than unitary.
It is expressed by Ei>1

19. CROSS ELASTICITY OF DEMAND
Cross elasticity of demand may be defined as the ratio of proportionate change in
quantity demanded of one commodity to a given proportionate change in the price
of its related commodity.
Let two community be X and Y,
Cross elasticity of demand= percentage change in quantity demanded of X
percentage change in price of Y
Ec = ∆qx × Py
∆px ×qx

20. DEGREE OF CROSS ELASTICITY OF DEMAND
Positive:- if x and y
are perfect substitute
for ea other the cross
elasticity of demand
will be Infinity i. e, the
slightest ange in the
price of why will
cause sustain shell
ange in a quantity
demand of x
Negative: if x and
y are two
Complementary
goods, the ange
in qunatity
demanded of y is
reduce by the
ange in Price of X
Zero:- If x and y are two
goods whi are not
substitute and not
complementary of ea
other at all, the price of
one good will not affect
the quantity demanded
of other
Ed =infinite Ed= - 1 Ed= 0

21. CONCLUSION
I would like to conclude that this power point presentation of subject
Business economics on the Topic Elasticity of demand is very
informative for me. I would like to extend my gratitude to my subject
teacher who give me the knowledge about this topic And now I am able
to understand The concept of demand and elasticity of demand and
why we study it, its types and degree.

22. Thank you

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