User:Elasticity of Demand

 Elasticity of Demand

Definition

Elasticity of Demand refers to the degree of responsiveness of quantity demanded to the changes in the determinants of demand . There are mainly three quantifiable determinants of demand:-

                  * Price of the Good   
                * Income of the Consumer  
                * Price of the Related Goods

Types of Elasticity Of Demand

As we have seen above there are three quantifiable determinants of demand, accordingly we can measure the degree of responsiveness of quantity demanded of a good to the changes in its own Price, Income of the Consumer and Price of the Related Goods. Hence elasticity of demand can be of three types

                * Price Elasticity of Demand
           * Income Elasticity of Demand   
           * Cross Elasticity of Demand

Price Elasticity of Demand

Price elasticity of demand measure the responsiveness of quantity demanded to the changes in price of the commodity.

Income Elasticity of Demand

Cross Elasticity of Demand

Methods of Measurement

Percentage Method

Point Method

Total Expenditure Method

Graphic Method

Point Elasticity

==== Arc Elasticity ====