ELASTICITY OF DEMAND & its types

[Audio] Hello Everyone, Myself V.Manikandan Iyer will explain what is elasticity of demand and its types in this video..

[Audio] In simple words, Degree of responsiveness of Quantity Demanded to the change in the Price or any Other Factor(Income or Price of other commodities) affecting elasticity of demand. The three factors that affect the elasticity of demand are Price of the commodity, income of the consumer and the prices of other commodities..

[Audio] There are three types of Elasticity of demand that are first Price elasticity, second Income Elasticity and third cross elasticity..

[Audio] This is the formula for income elasticity of demand and in simple words, it is the degree of responsiveness of a change in Quantity Demanded to the change in the Income of the consumer. for Example if there is a rise in consumer's income the demand for normal goods will increase, it is a positive income elasticity of demand and the demand for inferior goods will decrease, it has a negative income elasticity of demand..

[Audio] This is the formula for cross elasticity of demand and in simple words, It's the degree of responsiveness of change in the Quantity Demanded of one commodity to the change in the Price of the other commodity(complementary or substitutes). For example If the price of coke changes the quantity demanded for pepsi will also change.

[Audio] this is the formula for price elasticity of demand in simple words, It is the degree of responsiveness of change in Quantity Demanded of a commodity to the change in the Price of the commodity. For instance if the price of the commodity rises the quantity demanded for the product falls and vice-versa..

[Audio] There are 5 types of price elasticity: first Perfectly elastic demand second Perfectly inelastic demand, third unitary elastic demand fourth relatively elastic and fifth relatively inelastic demand. Perfectly elastic demand (PED=♾️): minimal or no change in price leads to infinite change in quantity demanded Perfectly Inelastic demand(PED=0): change in price brings no change in quantity demanded Unitary elastic demand (PED=1): change in price brings proportional change in quantity demanded. Relatively elastic demand(PED>1): slight change in price brings more than proportional change in quantity demanded. Relatively inelastic demand (PED<1): change in price brings less than proportional change in quantity demanded.

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