Types of Elasticity in Demand Analysis



 Types of demand elasticity

There are four varieties of demand elasticity:

  • 1. Demand and price elasticity
  • 2. The demand elasticity of income
  • 3. Demand cross-elasticity
  • 4. Advertisement-induced demand elasticity

Demand and price elasticity:

Price elasticity of demand was initially described by economist Marshall. Measures of the price elasticity of demand fluctuations in quantity and demand lead to price variations. It measures the quantity's percentage change in ratio. Required a price increase in terms of a percentage.

Five examples of price elasticity of demand are given.

  • Ideal demand elasticity. Demand is completely or endlessly elastic when a little change in price results in an indefinitely large change in quantity. E= in this instance. Even when prices remain constant, demand can occasionally vary drastically. In the situation of perfect elastic demand, a commodity's demand changes even when its price remains unchanged. In actual use, this flexibility is extremely uncommon. A demand curve on a straight line, parallel to Demand is distributed in a horizontal straight line. It demonstrates that for a price of Rs. 10, any quantity is wanted, and that if the price goes up, consumers will not buy the product.
  • Demand That Is Perfectly Inelastic When even a significant change in a commodity's price has no effect on the quantity required, that commodity is said to have perfectly inelastic demand.
  • Relatively elastic Demand: Demand is more than proportionally responsive to price changes when it is relatively elastic. i.e., a slight change in price causes a substantial shift in the quantity needed. In this instance. Flatter demand curves are expected. When the price goes up from Rs. 10 to Rs. 15, the quantity demanded falls from 300 units to 100 units, a decrease that is greater than the price rise.
  • Demand has a unitary elasticity. Meaning that changes in demand are always equal to changes in price. when each is equivalent. Demand falls from 200 units to 100 units as the price goes up from Rs. 10 to Rs. 15. Therefore, the price elasticity of demand is equal to unity when the quantity required changes in response to a change in price.
Would be including the other stuff as soon as possible, apologies guys :)

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