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प्रश्न
What are the methods of measuring Elasticity of demand?
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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
Income elasticity of demand for inferior goods is negative.
What will be the effect of 10 percent rise in price of a good on its demand if price elasticity of demand is (a) Zero, (b)-1, (c)-2.
When the price of good rise from Rs 10 per unit to Rs 12 per unit, its quantity demanded falls by 20 percent. Calculate its price elasticity of demand. How much would be the percentage change in its quantity demanded, if the price rises from Rs 10 per unit to Rs 13 per unit?
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 60 on a good priced at Rs 5 per unit. When price rises by 20 percent, the consumer continues to spend Rs 60 on the good. Calculate the price elasticity of demand by percentage method.
A consumer spends Rs 400 on a good priced at Rs 8 per unit. When its price rises by 25 percent, the consumer spends Rs 500 on the good. Calculate the price elasticity of demand by the Percentage method.
Price elasticity of demand of a good is (-) 1. Calculate the percentage change in price that will raise the demand from 20 units to 30 units.
Define or explain the following concept.
Unitary elastic demand.
State whether the following statements are TRUE or FALSE :
The demand of foodgrains is inelastic.
What do you mean by a normal good?
Explain price elasticity of demand.
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.
State whether the following statement is TRUE and FALSE.
Perfectly inelastic demand curve is parallel to the X axis.
State whether the following statement is TRUE and FALSE.
Unitary Elastic Demand rarely occurs in practice.
Write short answer for the following question :
Total outlay method of measuring price elasticity of demand.
Draw a diagram to show the elasticity of demand when it is greater than one.
Answer the following question.
When the price of X doubles, its quantity demanded falls by 60 percent. Calculate its price elasticity of demand. What should be the percentage change in price so that its quantity demanded doubles?
Arrange the following coefficients of price elasticity of demand in ascending order:
(−) 3.1, (−) 0.2, (−) 1.1
Give an economic term:
Elasticity resulting from a proportionate change in quantity demanded due to a proportionate change in price.
The concept of elasticity of demand was introduced by
If quantity supplied increases by 60% due to a 50% increase in price, then elasticity of supply is ______
Identify the correct pair of items from the following Columns I and II:
| Columns I | Columns II |
| (1) Perfectly elastic supply | (a) Es > 1 |
| (2) Perfectly inelastic supply | (b) Es < 1 |
| (3) Unitary elastic supply | (c) Es = 1 |
| (4) Relatively elastic supply | (d) Es = 0 |
Assertion (A): The elastic demand curve for luxuries is flatter than normal.
Reason (R): The coefficient of Elasticity ranges between 0 and 1.
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. Increase or decrease in demand for a commodity does not cause any change in its price. | (a) Effect on supply, in the case of Perfectly Elastic Demand. |
| 2. Increase or decrease in demand causes a change in the price of the commodity. Equilibrium quantity remains constant. | (b) Effect on demand, in the case of Perfectly Inelastic Supply. |
| 3. Increase or decrease in demand cause a change in the price of the commodity. Equilibrium quantity remains constant. | (c) Effect on demand, in the case of Perfectly Elastic Supply. |
| 4. Increase or decrease in demand for a commodity does not cause any change in its price. | (d) Effect on supply, in the case of Perfectly Elastic Demand. |
Explain the concept of price elasticity of demand.
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.
When change in price is greater than the change in quantity demand it is a case of elastic demand.
Who introduced the concept of elasticity of demand?
What is unit elasticity of demand?
Which statement about the law of demand and elasticity of demand is true?
