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प्रश्न
Explain any three types of price elasticity of demand with the help of diagrams.
Discuss five cases of elasticity of demand.
Explain the different types of price elasticity of demand with the help of diagrams.
उत्तर
- Perfectly Inelastic Demand: When quantity demanded does not change at all as a result of change in price of the commodity, demand of that commodity is said to be perfectly inelastic. In such a case, quantity demanded is independent of price changes. Demand here is non-responsive and the numerical value of price elasticity (Ed) will be zero. Demand curve will be parallel to Y-axis as shown in Figure. In the figure, demand (OQ) is fixed. If price increases or decreases, it remains unchanged. This type of situation is normally not found in our real life.
- Unit Elastic Demand: In this situation, percentage change in demand is equal to percentage change in price. For instance, if price of milk rises by 20 per cent and consequently its demand also falls by 20 per cent, price elasticity of demand will be unitary elastic. According to Dr. Marshall, if elasticity of demand is equal to unity, total expenditure of the commodity remains the same even when the price changes. Cases of unitary elasticity are very rare.
Elasticity of demand will be unity when the demand curve takes the shape of rectangular hyperbola. Rectangular hyperbola is a curve under which all rectangular areas are equal. Each rectangular area shows the total expenditure (price x quantity) spent on the commodity at various prices.
- Perfectly Elastic Demand Curve: It is a situation in which a small change in price causes an infinitely large change in quantity demanded. A small rise in price on the part of the seller reduces the demand to zero. A small reduction in price, will increase the demand to infinity (i.e., no seller is able to satisfy this demand at the reduced price). In our real life, we do not have any such commodity which has perfectly elastic demand. Here, elasticity of demand is equal to infinity and demand curve becomes parallel to X-axis as shown in Figure. Alternatively speaking, here quantity demanded is independent of price. Price is given.
Demand for a good can be perfectly elastic only when there are some perfect substitutes of the good are available in the market. But perfect substitutes are not found in real life.
- Highly Elastic Demand: Highly elastic demand occurs when a proportionate change in price results in a greater than proportionate change in demand.
- Highly inelastic demand: Demand is very inelastic when a proportional change in price results in a less-than-proportional change in demand.
Notes
Students should refer to the answer according to their questions.
संबंधित प्रश्न
Complete the following statement:
Price elasticity of demand on a linear demand curve at the Y-axis is equal to ________.
Assertion (A): A change in quantity demanded of one commodity due to a change in the price of another commodity is cross elasticity.
Reasoning (R): Changes in consumer income lead to a change in the quantity demanded.
Identify & explain the concept from the given illustration.
At Amulya Café, the demand for tea increased by 5% due to a 10% rise in the price of coffee.
Explain the types of elasticity of demand
Distinguish between:
Income Elasticity of Demand and Cross Elasticity of Demand
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.
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.
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.
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.
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.
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.
Calculate elasticity of demand on the basis of the following data.
| Price (Rs.) | Quantity (Kg) |
| 10 | 20 |
| 20 | 15 |
- Calculate the elasticity of demand.
- Is the demand elastic or inelastic?
Read the extract given below and answer the questions.
|
The Economic Times - 2024 “Lakshadweep becomes new keyword for investors. Praveg caught shareholder’s attention as it had last month received a work order for the development of operation, maintenance and management of atleast 50 tents at Lakshadweep’s island. The resorts will also offer commercial activities like scuba diving, destination weddings, corporate functions etc. Small cap soars 43% in 3 days. It is known for its luxury resorts in tourist places. During the day the stock rallied 17% to hit an all time high of Rs. 1,187.95" |
- What commercial activities would the resorts offer?
- State the quality of a factor of production highlighted above.
- Define price elasticity of demand.
- State the doctrine of Laissez faire.
Price elasticity of demand measures ______.
What will be the effect of 10 percent rise in price of a good on its demand if price elasticity of demand is −1?
Price elasticity of demand shows:
What is meant by cross elasticity of demand?
