Question

what is the distinction between increase in demand and expansion of demand explain the various methods to measure the elasticity of demand. Answer .​

Answer 1

Answer:

Explanation:Difference between extension of demand and increase in demand. Extension of demand refers to increase in quantity demanded due to decrease in own price of the commodity while increase in demand refers to increase in quantity demanded even when own price of the commodity is constant.

Answer 2

Distinction between increase in demand and expansion of demand

Explanation:

The distinction between extension of demand and increase in demand:

1. Extension of demand refers to a rise in the quantity demanded due to a decrease in the commodity's own price while the increase in demand refers to an increase in the quantity demanded even though the commodity's own price is constant.

2. Demand extension is studied on the assumption that other market determinants (other than the commodity's own price) are constant, whereas market decreases are studied on the assumption that the commodity's own price is constant.

3. Demand extension leads to downward change along the demand curve from left to right while demand improvement leads to forward shift in demand curve.

The three methods used to measure elasticity of demand:

1. Total expenditure method- The elasticity of demand in response to a price change can be calculated on the basis of changes in overall expenditure. It is worth noting that unlike percentage process, the elasticity of demand can not be measured by a precise mathematical coefficient.

 

2. Percentage method- According to this approach  elasticity of demand is  the division of percentage change in quantity demanded by the product price percent increase. Thus, given the change in percentage of both the demanded sum and the price we can derive demand elasticity. If the requested percentage fee is greater than the price shift rate,

3. Graphical method- According to this approach demand elasticity is determined on a straight line demand curve at different stages. The price elasticity of demand at a point on a straight line is equal to that of the lower demand curve segment separated by the upper demand curve segment.