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elastic
becoz wen price of the commodity changes , it affects the demand for the commodity .. Demand for a product is sensitive to price changes ..
With icrease in price , the demand decreases nd with decrease in price , demand increases ..
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∙ 12y ago
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What is a true statementregarding the price elasticity of demand?
Price elasticity of demand is positively correlated with the existence of substitute goods.
Factors affecting income elasticity of demand?
The income factor affecting income elasticity of demand is weather or not goods are necessities of luxury.
Determinants of own price elasticity of demand?
1. Number of Substitute Products - the greater the number of substitute products, the greater is its own price elasticity of demand. 2. Price of Product Relative to consumers income - the greater the price of product relative to consumers income the greater is it Price Elasticity. 3. Nature of Goods - whether it is luxury good or necessity goods. 4. Passage of Time - the longer the time lapsed the greater Price Elasticity. Hope this answer helps... :)
Total Outlay Method for measurement of Elasticity of Demand?
According to this method the degree of elasticity of demand is measured by comparing firm's revenue from consumer's total outlay on the goods before the change in the price with after the change in the price.
If the value of the cross price elasticity of demand between two goods is approximately zero they are considered?
unrelated
What is a true statementregarding the price elasticity of demand?
Price elasticity of demand is positively correlated with the existence of substitute goods.
Factors affecting income elasticity of demand?
The income factor affecting income elasticity of demand is weather or not goods are necessities of luxury.
Determinants of own price elasticity of demand?
1. Number of Substitute Products - the greater the number of substitute products, the greater is its own price elasticity of demand. 2. Price of Product Relative to consumers income - the greater the price of product relative to consumers income the greater is it Price Elasticity. 3. Nature of Goods - whether it is luxury good or necessity goods. 4. Passage of Time - the longer the time lapsed the greater Price Elasticity. Hope this answer helps... :)
The price elasticity of demand is the ratio of the?
Change in the demand for a goods and the change in its price. The ratio is negative but the negative sign is usually dropped.
Total Outlay Method for measurement of Elasticity of Demand?
According to this method the degree of elasticity of demand is measured by comparing firm's revenue from consumer's total outlay on the goods before the change in the price with after the change in the price.
If the value of the cross price elasticity of demand between two goods is approximately zero they are considered?
unrelated
What is elasticity of demand from an economics point of view?
The elasticity of demand from an economic point of view is used to show the responsiveness of the amount of a goods or services to a change of price. It gives a percentage of change in quality.
What is the meaning of elastricity demand?
The term elasticity indicates responsiveness of one variable to change in other variable.For e.g.,when variable x responds to change in variable y,variable x is said to be elastic.Likewise,demand is said to be elastic if it responds to change in price. There are three main determinants of demand,they are price of the commodity,income of the consumers,and price of the related goods.Thus,elasticity of demand means responsiveness of demand due to change in price of the commodity,income of the consumer,and price of the related gooods. Or you can say that,it measures the degree of change in the quantity demanded of the commodity in response to a given change in price of the commodity,change in consumer's income or price of the related goods. Accordingly,there are three main type of elasticities of demand: 1. Price elasticity of demand: Price elasticity of demand measures the responsiveness of demand for a commodity due to change in it's price. 2. Income elasticity of demand: It indicates the responsiveness of demand to change in consumer's income.It is the degree of change of demand to a change in consumer's income. 3. Cross elasticity of demand: It refers to change in quantity demanded of commodity x as a result of changes in the price of commodity y. Here, x and y can be either substitute goods or complementary goods).
What do you mean by cross demand?
Demand can be defined as the quantity of goods and services that a consumer is willing and ready to buy and at given price and at a particular period of time. Cross demand can be explain by using the knowledge of cross elasticity of demand. Hence cross demand is the same as cross elesticity of demand. Cross elasticity of demand measured the degree of responsiveness of the demand for one good due to a price change of another good. Complements goods are denoted by negative cross elasticity while substitude goods are denoted by positive elasticity. Cross demand is measured as the percentage change in demand for the first good that occurs in response to a percentage change in price of the second good. Take for instance, if, in response to a 5% increase in the price of Kerosine, the demand of new stove that are kerosine inefficient decreased by 10%, the cross elasticity of demand would be: -10% divided by 5% equal to -1
What is the difference between price elasticity and cross elasticity of demand?
Cross price elasticity of demand measures how much demand of one good, say x changes when the price of another good, say y changes, holding everything else constant. For example, you can measure what happens to the demand of bread when the price of milk changes. The cross price elasticity is calculated as the percentage change in the quantity demanded of good x divided by the percentage change in the price of good y. If the cross price elasticity is negative, then we call such goods Complements (example: pizza and soft drinks -- they are consumed together). If the cross price elasticity is positive, then we call such goods Substitutes (example: pizza and burgers -- you usually consume either or). The income elasticity of demand measures the change in the quantity demanded of some good, when the income changes, holding everything else constant. For example you can measure what happens to the demand for expensive red wine when income increases. The income elasticity is calculated as the percentage change in the quantity demanded of the good divided by the percentage change in income. If the income elasticity for a good is positive we call them normal goods. It can be between 0 and 1, and we call it income inelastic demand for goods such as food, clothing, newspaper. If it is above 1, we call it income elastic demand. Examples are the red wine, cruises, jewelry, art, etc. If the income elasticity is negative, this means that as income increases, the quantity demanded for those goods actually decreases, we call those goods inferior goods. Examples are "Ramen noodles", cheap red wine, potatoes, rice. etc.
When is demand when absolute price elasticity of demand equals 2.5?
Meaning that if prices change by 1%, the change in quantity would be 2.5% (at $100/piece, 1000 goods are consumed. if the price rises to $101, only 975 goods are consumed. And if the price falls to $99, 1025 goods are consumed.)
What makes a price elastic?
If a change or increase in price will affect demand. Elastic goods are usually those that the consumer does not NEED to purchase, such as luxury goods. When the producer increases price, demand will usually increase. Inelastic goods are those that the consumer needs to buy no matter what the price is, such as milk or salt. A sale or price increase won't affect the demand at all.
