Question

what is elasticity of demand ? explain various types of elasticity of demand.

Answer 1

Elasticity of demand refers to price elasticity of demand. It is the degree of responsiveness of quantity demanded of a commodity due to change in price, other things remaining the same.
Where, EP= Price elasticity of demand

q= Original quantity demanded

∆q = Change in quantity demanded
p= Original price

∆p = Change in price
Calculation of Price Elasticity of Demand

Suppose that price of a commodity falls down from Rs.10 to Rs.9 per unit and due to this, quantity demanded of the commodity increased from 100 units to 120 units. What is the price elasticity of demand?

Give that,

p= initial price= Rs.10

q= initial quantity demanded= 100 units

∆p=change in price=Rs. (10-9) = Rs.1

∆q=change in quantity demanded= (120-100) units = 20 units

Now,
The quantity demanded increases by 2% due to fall in price by Rs.1.


Types or degrees of price elasticity of demand
1. Perfectly Elastic Demand (EP = ∞)
2. Perfectly Inelastic Demand (EP = 0)
3. Relatively Elastic Demand (EP> 1)
4. Relatively Inelastic Demand (Ep< 1 )
5. Unitary Elastic Demand ( Ep = 1)

Answer 2

Explanation:

if a body its original size and shape after the removal of deforming force it is said to be elastic body and this property is called elasticity for example if we stretch our Bandhan day release it it snaps back to its original length