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PRICE ELASTICITY
OF DEMAND
TOPICS: CONCEPT OR MEASUREMENT OF
PRICE ELASTICITY OF DEMAND
By :- Anshu
GRAPH OF PRICE
ELASTICITY
Professor Alfred Marshall developed the total outlay
method , also known as total expenditure method . The
price elasticity of demand can, according to this
approach , be calculated by comparing the total
expenditure on the commodity before and after the price
adjustment
Total Outlay = Price × Quantity Demand
We can get one of the three results when comparing the
expenditure . They are
 Request elasticity would be greater than the unity of
(Ep>1)
If total expenditure rises with a decrease in price and decrease
with a rise in price, the value of PED is greater than 1. Here price
, and overall spending or outlay shift in the opposite direction
 If elasticity of demand will be equal to unity (Ep=1)
If , in response to rise in the price of the commodity, the overall
expenditure on the commodity remains unchanged, the value of
the PED would be equal to 1
 The elasticity of demand will be less than unity(Ep<1)
If total spending decreases with a decline in price and rises with
a rise in price. Here, commodity prices and overall spending are
going in the same direction.
The Percentage method is one of the widely used
methods for calculating demand price elasticities, where
price elasticity is calculated in terms of the rate of the
percentage change in the quantity requested to the
percentage change in price.
price...ppt - 115.ppt
price...ppt - 115.ppt
price...ppt - 115.ppt
price...ppt - 115.ppt
price...ppt - 115.ppt

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price...ppt - 115.ppt

  • 1. PRICE ELASTICITY OF DEMAND TOPICS: CONCEPT OR MEASUREMENT OF PRICE ELASTICITY OF DEMAND By :- Anshu
  • 2.
  • 3.
  • 4.
  • 5.
  • 6.
  • 7.
  • 9.
  • 10.
  • 11. Professor Alfred Marshall developed the total outlay method , also known as total expenditure method . The price elasticity of demand can, according to this approach , be calculated by comparing the total expenditure on the commodity before and after the price adjustment Total Outlay = Price × Quantity Demand
  • 12. We can get one of the three results when comparing the expenditure . They are  Request elasticity would be greater than the unity of (Ep>1) If total expenditure rises with a decrease in price and decrease with a rise in price, the value of PED is greater than 1. Here price , and overall spending or outlay shift in the opposite direction  If elasticity of demand will be equal to unity (Ep=1) If , in response to rise in the price of the commodity, the overall expenditure on the commodity remains unchanged, the value of the PED would be equal to 1  The elasticity of demand will be less than unity(Ep<1) If total spending decreases with a decline in price and rises with a rise in price. Here, commodity prices and overall spending are going in the same direction.
  • 13. The Percentage method is one of the widely used methods for calculating demand price elasticities, where price elasticity is calculated in terms of the rate of the percentage change in the quantity requested to the percentage change in price.