ELASTICITY OF DEMAND

by • 19/06/2011 • B.COM PART 1 EconomicsComments (0)626

The law of demand state that as the price of a certain good goes up, its quantity demanded decreases with other factors remaining the same.

One short coming of this statement is that it does not explain that how much of an increase or decrease in quantity demanded occurs due to a change in price. The elasticity of demand occurs due to a change in price.

The elasticity of demand explains the percentage change in quantity demanded in response to change in price.

There are various kinds of elasticity of demand:

1. Price elasticity

2. Income elasticity

3. Cross elasticity



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