Advertisements
Advertisements
प्रश्न
What are the methods of measuring Elasticity of demand?
State the methods to measure elasticity of demand.
Advertisements
उत्तर
There are three methods of measuring the elasticity of demand.
The percentage method:
Ep = `(ΔQ)/(ΔP)xx P/Q`
It is also known as the ratio method when we measure the ratio as
Ep = `(%ΔQ)/(%ΔP)`
% ∆Q = percentage change in demand, %∆P = Percentage change in price.
Total outlay method:
Marshall suggested that the simplest way to decide whether demand is elastic or inelastic is to examine the change in the total outlay of the consumer or total revenue of the firm.
Total revenue = Price × Quantity sold
TR = P × Q
Total outlay method:
| Price | Quantity Demanded | Total Outlay | Elasticity |
| 150 | 3 | 450 | e > 1 |
| 125 | 4 | 500 | e = 1 |
| 100 | 5 | 500 | e < 1 |
| 75 | 6 | 450 |
Demand is elastic if there is an inverse relationship between price and total outlay, and direct relation means inelastic. Elasticity is unity when the total outlay is constant.
संबंधित प्रश्न
As we move along a downward sloping straight line demand curve from left to right, price
an elasticity of demand : (choose the correct alternative)
(a) remains unchanged
(b) goes on falling
(c) goes on rising
(d) falls initially then rises
The measure of price elasticity of demand of a normal good carries minus sign while price elasticity of supply carries plus sign. Explain why?
A consumer spends Rs 1000 on a good priced at Rs 8 per unit. When price rises by 25 percent, the consumer continues to spend Rs 1000 on the good. Calculate the price elasticity of demand by percentage method.
A consumer spends Rs 100 on a good priced at Rs 4 per unit. When price rises by 50 percent, the consumer continues to spend Rs 100 on the good. Calculate the price elasticity of demand by percentage method
A consumer buys 30 units of a good at a price of the Rs10per unit. The price elasticity of demand for the good is (-) 1. How many units will the consumer buy at a price of Rs 9 per unit? Calculate.
When the price of good rises from Rs10 to Rs12 per unit, its demand falls from 25 units to 20 units. What can you say about price elasticity of demand of the good through the 'expenditure approach'?
Explain any 'two methods' of measuring price elasticity of demand.
A consumer buys 10 units of a commodity at a price of Rs. 10 per unit. He incurs an expenditure of Rs 200 on buying 20 units. Calculate price elasticity of demand by the percentage method. Comment upon the shape of demand curve based on this information.
State whether the following statement is True or False :
Concept of elasticity of demand is useful for finance minister.
What is the elasticity of demand?
Give reasons or explain the following statements
Demand for basic necessities is inelastic.
Fill in the blanks with appropriate alternatives given in the bracket.
Demand elasticity can be measured from demand curve by ___________ method.
What do you mean by a normal good?
What do you mean by substitutes? Give examples of two goods which are complements of each other.
Explain price elasticity of demand.
Consider the demand curve D(p) = 10 − 3p. What is the elasticity at price `5/3` ?
Fill in the blank with appropriate alternatives given below:
Income elasticity of demand for inferior goods is __________.
Fill in the blank with appropriate alternatives given below:
Cross elasticity of demand is applicable to ____________ goods.
Fill in the blank with appropriate alternatives given below:
The slope of demand curve is _______________ in case of inelastic demand.
Give reason or explain the following statement:
Demand for habitual goods is inelastic.
Define price elasticity of demand.
State whether the following statement is true or false. Give valid reasons in support of your answer.
The coefficient of price elasticity of demand for the commodity is inversely related to the number of alternative uses of the commodity.
Give economic term:
Elasticity resulting from infinite change in quantity demanded.
The concept of elasticity of demand was introduced by
If a good takes up a significant share of consumers' budget, its demand will be ______.
Identify the correctly matched pair from the items in Column A by matching them to the items in Column B:
| Column A | Column B | ||
| 1 | Relatively Inelastic Demand | (a) | ed > 1 |
| 2 | Relatively Elastic Demand | (b) | ed < 1 |
| 3 | Perfectly Inelastic Demand | (c) | ed = 0 |
| 4 | Perfectly Elastic Demand | (d) | ed = 1 |
State with reasons whether you agree or disagree with the following statement:
The elasticity of demand gets influenced by the nature of the commodity.
Assertion (A) : A change in quantity demanded of one commodity due to a change in the price of other commodity is cross elasticity.
Reasoning (R) : Changes in consumers income leads to a change in the quantity demanded.
The price of a good decreases from ₹100 to 80 per unit. If the price elasticity of demand for the good is 2 and the original quantity demanded is 30 units, calculate the new quantity demanded.
The elasticity of demand for school bag will be ______.
Price elasticity of demand is defined as the percentage change in the quantity demanded of a commodity divided by the percentage change in the price of that commodity.
Define elasticity of demand.
