Elasticity of Demand

The Role Play

Contributors:

Khushboo ParekhShalaka KulkarniAprajita MittraAakriti PandeyAkanksha KaushikDrishty Singh

Lets learn the concept of Income Elasticity of Demand through a role play.

Introduction Elasticity of demand is defined as the percentage change

in quantity demanded caused by 1% change in the determinant under consideration while other determinants are held constant.

Elasticity of Demand (Ed) is a measure to show responsiveness in economics, of a quantity demanded and its change in price, ceteris paribus.

The formula for calculation of Elasticity of Demand

Ed = Percentage change in Quantity

Percentage change in Price

Types of Elasticity of Demand

Price Elasticity of demand

Income Elasticity of demand

Cross price elasticity of demand

Arc elasticity of demand

Advertising and Promotional elasticity

Income Elasticity of Demand Income Elasticity of Demand is the degree of

responsiveness of quantity demanded of any commodity X to the change in consumer’s income.

The formula for Elasticity of Demand is expressed as

Ey = Percentage change in quantity demand of X

Percentage change in Income The types of income elasticity are:

1. Positive Income Elasticity

2. Negative Income Elasticity

3. Zero Income Elasticity

Conclusion

The types of Income Elasticity of demand were discussed with daily life examples

We studied the consequences of rise and fall in income with respect to their changed demands

Also gave an insight upon how lives of people are affected with the change in income

The higher the percentage change, more is the effect, and vice versa

Thank you!