# Economics

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- Types of elasticity of demand

- Price elasticity

Used as a measure of the responsiveness of demand to changes in the commodities of price.

Types of Price elasticity

If ep=0; the demand is perfectly inelastic

If ep=1; the demand has unitary elastic

If ep=∞; the demand is perfectly elastic

If 0<e<1; the demand is inelastic

If 1<e<∞; the demand is elastic

- Income elasticity

It is defined as the proportionate change in the quantity demanded resulting from a proportionate change in income.

Ey= dQ/dY X Y/Q

- Cross elasticity

It is defined as the proportionate change in the quantity demanded of ‘X’ resulting from a proportionate change in the price of ‘Y”.

Exy=dQx/dPy. Py/Qx

- Methods for measuring price elasticity of demand

There are basically four ways by which we can measure price elasticity of demand. These methods are

- Percentage method
- Total outlay method
- Point method
- Arc method

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