Find below the data for price elasticity and income elasticity of demand for 5 different commodities. Interpret the values in the table in the light of • Whether the demand is elastic or inelastic for each of the commodities and why • What do you mean by negative income elastic demand in case of commodity Give example for each type of commodity. Commodity Price Elasticity of demand Income elasticity of demand 1 -0.3 +0.6 2 -1.45 +5.60 3 -5.09 -1.67 4 -0.7 +0.8 5 1.0 +1.0 3 a) "Different prices can be charged by the producer in the different market segments to maximize revenue." Explain the statement by taking a case of aviation industry. 3 b) What do you mean by price rigidity? Which type of market structure is characterized by the price rigidity? Explain your views taking an example of industry facing the problem of price rigidity.
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Here we know more about the elasticity of the price and the kind of commodity that is associated with the given price.
The demand and the supply can depend on price elasticity and in-elasticity also.
Price elasticity measures the rate of responsiveness of the quantity that is demanded or supplied with relation to a good introduced in the society.
Elasticities can also be unitary.
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