Distinguish between price elasticity of Demand and Cross elasticity of Demand with graphical presentation. How can you measure the elasticity of demand? Explain with example how the concept of elasticity of demand is useful for an industry in its decision making process?
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price elasticity of demand: may be defined as:-percentage change in demand of commodity divided by percentage change in price of same commodity.
cross elasticity of demand:may be defined as:-percentage change in the quantity of one goods divided by percentage change in price of other goods.
we can measure the elasticity of demand by:price elasticity, income elasticity,cross elasticity.
cross elasticity of demand:may be defined as:-percentage change in the quantity of one goods divided by percentage change in price of other goods.
we can measure the elasticity of demand by:price elasticity, income elasticity,cross elasticity.
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