Presentation On

TYPES OF PRICE

ELASTICITY OF DEMAND

Definition Of Price Elasticity Of Demand The change in the quantity

demanded of a product due to a change in its price is known as Price elasticity of demand.

Thus, the sensitiveness or responsiveness of demand to change in price is as called elasticity of demand

Kinds Of Price Elasticity Of Demand1) Perfectly elastic demand2) Relatively elastic demand3) Elasticity of demand equal to utility4) Relatively inelastic demand5) Perfectly inelastic demand Let Us See Some Views On Them

Perfectly elastic demand

P

R

I

C

E

y

0 x

Perfectly elastic demand curve

D D

When the demand for a product changes –increases or decreases even when there is no change in price, it is known as perfect elastic demand.

Perfectly inelastic demand

demand

D

D

Perfectly inelastic demand curve

0

Y

X

P

R

I

C

E

When a change in price, does not effect, the changes in quantity demand, it is known as perfectly inelastic demand.

Elasticity of demand equal to utility

Elasticity of demand equal to utility curve

y

x0 demand

P

R

I

C

E

D

D

When the proportionate change in demand is equal to proportionate changes in price, it is known as unitary elastic demand

Relatively elastic demand

Relatively elastic demand curve

P

R

I

C

E

demand0 x

y

D

D

When the proportionate change in demand is more than the proportionate changes in price, it is known as relatively elastic demand.

Relatively inelastic demand

Relatively inelastic demand curve

XO

Y

demand

D

D

P

R

I

C

E

When the proportionate change in demand is less than the proportionate changes in price, it is known as relatively inelastic demand

ALL KINDS OF DEMAND CAN BE SHOWN IN ONE DIAGRAM AS FOLLOW

DD1

D2D3

D4

D5

Y

X0

DEMAND

P

R

I

C

E

WHERED1) Perfectly elastic

demandD2)Relatively elastic

demandD3)Elasticity of demand

equal to utilityD4)Relatively inelastic

demandD5)Perfectly inelastic

demand

Measurement Of Price Elasticity Of Demand

There are main methods like1. Percentage method or

proportionate method2. Total outlay method or total

revenue method3. Geometric method or point method 4. Arc elasticity of demand

Measurement of Price Elasticity of Demand

Price elasticity of demand

= Proportionate change in demand for x

Proportionate change in Price for x

OR

_____qx

Qx/

_____px

Px

Here,qx = change in the quantity of x demanded

Qx = original quantity of x demanded

px = change in the price of x

Px = original price of x

Thanking You All

By- Savio Pereira