yamini rawat ppt

Meaning of price elasticity of demand PRICE ELASTICITY OF DEMAND REFERS TO THE DEGREE OF RESPONSIVENESS OF QUANTITY DEMANDED TO CHANGE IN PRICE OF THE COMMODITY

Measurement of price elasticity of • price inelastic demand • Less than unit elastic demand • More than unit elastic demand • Unit elastic demand • Perfectly elastic demand

Perfectly inelastic demand When quantity demanded does not change at allin response to change in the price of commodity , demand for that commodity is said to be perfectlyinelastic as shown in graphically demand curve is vertical/ parallel to y – axis . Here elasticity of demand = 0.

Less than unit elastic demand when percentage change in demand is less than the percentage change in price , the demand for the commodity is said to be less elastic or less than unit elastic (or respectively inelastic). For example , demand for necessary goods (food items). Here elasticity of d emand is less than one. Price (per kg) Demand (kg) ₹40 2 ₹10 3

More than unit elastic demand When percentage change in the demand is significantly more than percentage change in price the demand is said to be more than unit elastic or highly elastic For example demand for luxury gooods like jewellery , here elasticity of demand more than one.

Unit elastic demand When percentage change in demand is equal to the percentage change in price , the demand for commodity is said to be unit elastic or unitary elastic Price (per me) Demand (m) ₹100 100 ₹150 50

Perfectly elastic demand When the demand for a commodity expands (rises) or contracts (falls) to any extent without or with very little change in price , the demand for the commodity is said to be perfectly elastic or infinitely elastic as depicted