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प्रश्न
What are the methods of measuring Elasticity of demand?
State the methods to measure 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
Explain the factors determining the elasticity of demand.
The price elasticity of demand for a good is - 0.4. If its price increases by 5 percent, by what percentage will its demand fall? Calculate.
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?
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
When the price of a commodity X falls by 10 percent. Its demand rises from 150 units to 180
units. Calculate is price elasticity of demand. How much should be the percentage fall in its
price so that its demand rises from 150 to 210 units?
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 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'?
8 units of a good are demanded at a price of Rs 7 per unit. Price elasticity of demand is (−) 1. How many units will be demanded if the price rises to Rs 8 per unit? Use expenditure approach of price elasticity of demand to answer this question.
Define or explain the following concept.
Unitary elastic demand.
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.
All desires are not demand.
The demand for salt is ______.
Fill in the blank with appropriate alternatives given below:
Perfectly elastic demand curve is ________________.
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.
Total outlay is price multiplied by quantity.
Give reason or explain the following statement:
Demand for necessaries is inelastic.
Give reason or explain the following statement:
Concept of Elasticity of Demand helps trade union leaders.
Give reason or explain the following statement:
Demand for commodity having multiple uses has elastic demand.
Give reason or explain the following statement:
Demand for goods having snob appeal has elastic demand.
Define price elasticity of demand.
Answer the following question.
If the price of a commodity rises by 40% and its quantity demanded falls from150 units to 120 units, calculate the coefficient of price elasticity of demand for the commodity.
Give economic term:
Elasticity resulting from infinite change in quantity demanded.
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
Elasticity of demand is equal to one indicates
Elasticity of the demand is available when:
What will be the effect on price elasticity of demand, if the time required to find the substitute product is more.
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. |
Assertion (A): Elasticity of demand explains that one variable is influenced by another variable.
Reasoning (R): The concept of elasticity of demand indicates the effect of price and changes in other factors on demand.
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.
Explain the concept of price elasticity of demand.
As a result of 5% fall in the price of a good, its demand rises by 12%, the demand for the good will said be ______.
What is meant by elastic demand?
Which statement about the law of demand and elasticity of demand is true?
