{"id":4393,"date":"2021-08-03T10:13:07","date_gmt":"2021-08-03T04:43:07","guid":{"rendered":"https:\/\/www.goseeko.com\/blog\/?p=4393"},"modified":"2021-10-30T07:39:54","modified_gmt":"2021-10-30T07:39:54","slug":"what-is-elasticity-of-demand","status":"publish","type":"post","link":"https:\/\/www.goseeko.com\/blog\/what-is-elasticity-of-demand\/","title":{"rendered":"What is Elasticity of Demand?"},"content":{"rendered":"\n<p>Under law of demand, price falls and demand rises, vice versa. Moreover the law of demand does not determines how much the quantity rise or fall for a given change in price. So the concept of elasticity of demand is derived to know how much quantity demanded changes for a change in the price of goods.<\/p>\n\n\n\n<p>\u201cThe <a href=\"https:\/\/www.investopedia.com\/terms\/e\/elasticity.asp\">elasticity of demand<\/a> in a market is great or small according as the amount demanded increases much or little for a given fall in price, and diminishes much or little for a given rise in price\u201d. \u2013 Dr. Marshall.<\/p>\n\n\n\n<p>Therefore, elasticity means sensitivity of demand to the change in price.<\/p>\n\n\n\n<p>Formula <\/p>\n\n\n\n<p>EP = proportional changes in quantity demanded\/proportional changes in price<\/p>\n\n\n\n<h4 class=\"wp-block-heading\">&nbsp;<strong>Types<\/strong><\/h4>\n\n\n\n<h5 class=\"wp-block-heading\"><strong>Price elasticity of demand<\/strong><\/h5>\n\n\n\n<p>Firstly, the <a href=\"https:\/\/www.investopedia.com\/terms\/p\/priceelasticity.asp\">price of elasticity demand<\/a> refers to change in the quantity demanded to the price of the commodity<\/p>\n\n\n\n<p>&#8220;Price elasticity is a ratio of proportionate changes in the quantity demanded of a commodity to a given proportionate change in its price.&#8221;<\/p>\n\n\n\n<p>Thus, it is responsiveness of change in demand due to a change in price only. Other factors such as income, population, tastes, habits, fashions, prices of substitute and complementary goods assume to be constant.<\/p>\n\n\n\n<p>Formula \u2013<\/p>\n\n\n\n<p>Ep = percentage change in quantity demanded\/percentage change in price<\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><strong>Income elasticity of demand<\/strong><\/h5>\n\n\n\n<p>Secondly, the income elasticity measures the sensitivity of quantity demanded for a goods to a change in consumer\u2019s income.<\/p>\n\n\n\n<p>Formula &#8211;&nbsp; Percentage change in the quantity demanded \/ Percentage change in the consumer\u2019s income<\/p>\n\n\n\n<h5 class=\"wp-block-heading\"><strong>Cross elasticity of demand<\/strong><\/h5>\n\n\n\n<p>\u201cThe cross elasticity  refers to the proportional change in the quantity of X good demanded resulting from a given relative change in the price of a related good Y\u201d &nbsp; <\/p>\n\n\n\n<p>Similarly, it measures the percentage change in the quantity demanded of commodity X to the percentage change in the price of its substitute\/complement Y<\/p>\n\n\n\n<p>Formula \u2013&nbsp; proportionate change in quantity demanded of X \/ Proportionate change in the price of Y<\/p>\n\n\n\n<p><strong>Interested in learning about similar topics? <\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.goseeko.com\/blog\/what-is-monopolistic-competition\">What is Monopolistic Competition?<\/a><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>elasticity of demand is derived to know how much quantity demanded changes for a change in the price of goods or services.<\/p>\n","protected":false},"author":28,"featured_media":4230,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[27],"tags":[],"class_list":["post-4393","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commerce"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.3.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is Elasticity of Demand? - Goseeko blog<\/title>\n<meta name=\"description\" content=\"Elasticity of demand is derived to know how much quantity demanded changes for a change in the price of goods or services.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.goseeko.com\/blog\/what-is-elasticity-of-demand\/\" \/>\n<meta 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