# Elasticity of Demand

Elasticity of Demand : –

There are various factors, which can result in change in demand of a commodity. Some of these factors, may result in a high change in demand, while others may result in a low change in demand. Elasticity of Demand refers to the percentage change in demand for a given commodity , when there is  a particular  percentage change in any of the factors affecting demand for that commodity.

Elasticity of demand =           Percentage change in demand for a given commodity

Percentage change in any of the factors affecting demand for that commodity

Types of Elasticity of demand : –

1.  Price Elasticity of demand :-  Price Elasticity of demand refers to the percentage change in demand for a commodity, with respect to percentage change in the price of the given commodity.
2. Cross Elasticity of demand : – Cross elasticity of demand refers to the percentage change in demand for a commodity ,with respect to percentage change in the price of a  substitute good or complementary good.
3. Income Elasticity of demand:- Income elasticity of demand refers to the percentage change in demand for a commodity, with respect to percentage change in the income of the consumer.

Price elasticity of demand:-

Price Elasticity of Demand , means the degree of responsiveness of demand for a commodity , with reference to change in the price of such commodity.

Features of Price Elasticity   : –

• Price Elasticity of Demand establishes a quantitative relationship, between quantity demanded of a commodity and its price, while other factors remain constant. This means, what will be the quantitative change in the demand of a given commodity, if the price of the commodity changes  . It is assumed that all other factors which can impact demand remain constant.

•  A Higher  numerical value of Price Elasticity of Demand implies that, change in  price  of the commodity significantly impacts   the quantity demanded  for such commodity.

• Change in price different goods may lead to a different  change in the demand of such goods. In some cases ,  there maybe a small change in demand due to change in price, Where is another cases there maybe a  large  change in demand due to change in price. For example, if prices of Petrol and Apple rise by 2% and their demands falls by 20% and 5% respectively, then commodity ‘Petrol’ is said to be more elastic as compared to commodity ‘Apple’.

• Given that price is the most important factor which determines  demand, price elasticity of demand is also referred to as “Elasticity of demand” or “demand Elasticity” or  “Elasticity”.