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Questions
What is meant by price elasticity of demand?
Define price elasticity of demand.
Define elasticity of demand.
What is price elasticity of demand?
Solution 1
Price elasticity of demand refers to the responsiveness or sensitivity of demand to changes in the price of a commodity while other factors stay constant. Alfred Marshall introduced this concept. Alfred Marshall, "Elasticity of demand may be defined as the percentage change in quantity demanded to the percentage change in price.
`"P"_"(Ed)" = "Proportionate change in demand"/"Proportionate change in price"`
Solution 2
Price elasticity of demand measures the degree of responsiveness of the quantity demanded of a commodity to a change in its price.
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Distinguish between:
Income Elasticity of Demand and Cross Elasticity of Demand
Define income 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.
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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.
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With the help of a diagram, explain the Unitary elastic demand curve.
What will be the effect of 10 percent rise in price of a good on its demand if price elasticity of demand is zero?
How is the price elasticity of demand of a commodity is affected by the number of its substitutes.
