Question

Discuss the demand elasticity and consumer response. How is price elasticity calculated? Provide an example from your research.

Answer 1

Demand elasticity in simple terms is defined as the degree of responsiveness of change in price when there is a change in the quantity demanded

In terms of ratio ,it s the percentage change in quantity demand to the percentage change in the price.

The demand is basically of three types-

elastic demand

inelastic demand

unit elastic demand

For example water is inelastic demand

An inelastic demand is defined as when there is very slight change in the quantity demanded even with very high change in the price

The same goes for water as we all know that water is a basic need so even there is a very high change in the price quantity demand but itwill not affect very hardly to the demand of water.

Opposite to it is elastic demand in which even with the slight change in the price ,there is high change in quantity demanded.

The best example of this can be normal goods

IPED= of charge in quanting dormand / Charge in poke