types of price elasticity
Post on 20-Oct-2014
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Types of demand elasticitTRANSCRIPT
Presentation On
TYPES OF PRICE
ELASTICITY OF DEMAND
Definition Of Price Elasticity Of Demand The change in the quantity
demanded of a product due to a change in its price is known as Price elasticity of demand.
Thus, the sensitiveness or responsiveness of demand to change in price is as called elasticity of demand
Kinds Of Price Elasticity Of Demand1) Perfectly elastic demand2) Relatively elastic demand3) Elasticity of demand equal to utility4) Relatively inelastic demand5) Perfectly inelastic demand Let Us See Some Views On Them
Perfectly elastic demand
P
R
I
C
E
y
0 x
Perfectly elastic demand curve
D D
When the demand for a product changes –increases or decreases even when there is no change in price, it is known as perfect elastic demand.
Perfectly inelastic demand
demand
D
D
Perfectly inelastic demand curve
0
Y
X
P
R
I
C
E
When a change in price, does not effect, the changes in quantity demand, it is known as perfectly inelastic demand.
Elasticity of demand equal to utility
Elasticity of demand equal to utility curve
y
x0 demand
P
R
I
C
E
D
D
When the proportionate change in demand is equal to proportionate changes in price, it is known as unitary elastic demand
Relatively elastic demand
Relatively elastic demand curve
P
R
I
C
E
demand0 x
y
D
D
When the proportionate change in demand is more than the proportionate changes in price, it is known as relatively elastic demand.
Relatively inelastic demand
Relatively inelastic demand curve
XO
Y
demand
D
D
P
R
I
C
E
When the proportionate change in demand is less than the proportionate changes in price, it is known as relatively inelastic demand
ALL KINDS OF DEMAND CAN BE SHOWN IN ONE DIAGRAM AS FOLLOW
DD1
D2D3
D4
D5
Y
X0
DEMAND
P
R
I
C
E
WHERED1) Perfectly elastic
demandD2)Relatively elastic
demandD3)Elasticity of demand
equal to utilityD4)Relatively inelastic
demandD5)Perfectly inelastic
demand
Measurement Of Price Elasticity Of Demand
There are main methods like1. Percentage method or
proportionate method2. Total outlay method or total
revenue method3. Geometric method or point method 4. Arc elasticity of demand
Measurement of Price Elasticity of Demand
Price elasticity of demand
= Proportionate change in demand for x
Proportionate change in Price for x
OR
_____qx
Qx/
_____px
Px
Here,qx = change in the quantity of x demanded
Qx = original quantity of x demanded
px = change in the price of x
Px = original price of x
Thanking You All
By- Savio Pereira