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प्रश्न
Explain the term elasticity of demand.
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उत्तर
Alfred Marshall was the first economist to develop the concept of price elasticity of demand as the ratio of a relative change in quantity demanded to a relative change in price. A relative measure is needed so that changes in different measures can be compared. These relative changes in demand and price are measured by percentage change. The percentage changes are independent of units. The elasticity of demand is the ratio between the percentage change in demand and percentage change in price.
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संबंधित प्रश्न
Income elasticity of demand for inferior goods is negative.
Price elasticity of demand for the two goods X and Y are zero and (–) 1 respectively. Which of the two is more elastic and why?
A consumer buys 27 units of a good at a price of Rs 10 per unit. When the price falls to Rs 9 per unit, the demand rises to 30 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 spends Rs 200 on a good priced at Rs 5 per unit. When the price falls by 20 percent, he continues to spend Rs 200. Find the price elasticity of demand by percentage method.
State whether the following statements are TRUE or FALSE :
The demand of foodgrains is inelastic.
Consider the demand for a good. At price Rs 4, the demand for the good is 25 units. Suppose the price of the good increases to Rs 5, and as a result, the demand for the good falls to 20 units. Calculate the price elasticity.
Give reason or explain the following statement:
Demand for goods having snob appeal has elastic demand.
Define price elasticity of demand.
- Luxuries goods have generally elastic demand.
- Goods whose close substitutes are available have inelastic demand.
