Demand is elastic or inelasticelasticity of a demand and its ttpe
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Demand elasticity: This refers to how sensitive the demand is in accordance with changes in price of the commodity. It can be calculated as:
Percentage change in quantity demanded ÷ percentage change in price/income
Demand is said to be elastic when commodity is price sensitive which means there is greater change in quantity demanded with changes in prices/income.
PED = 1 or more shows demand elasticity
Demand is said to be inelastic when commodity is not price sensitive which means there no little change in quantity demanded with respect to change in prices/income. PED = >1 shows demand in-elasticity
Types of demand elasticities include:
1. Cross elasticity of demand
2. Income elasticity of demand
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