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Question
What is the elasticity of demand?
Solution
- The term elasticity indicates the responsiveness of one variable to a change in the other variable. Elasticity of demand refers to the degree of responsiveness of quantity demanded to a change in its price or any other factor.
- According to Prof. Marshall, “Elasticity of demand is great or small according to the amount demanded which rises much or little for a given fall in price and quantity demanded falls much or little for a given rise in price.”
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| (1) Perfectly elastic supply | (a) Es > 1 |
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| (4) Relatively elastic supply | (d) Es = 0 |
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| 1 | Relatively Inelastic Demand | (a) | ed > 1 |
| 2 | Relatively Elastic Demand | (b) | ed < 1 |
| 3 | Perfectly Inelastic Demand | (c) | ed = 0 |
| 4 | Perfectly Elastic Demand | (d) | ed = 1 |
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| Price of Pen (₹) | Demand for Pen |
| 10 | 500 |
| `square` | 400 |
| 30 | `square` |
| `square` | 200 |
| 50 | `square` |
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