Demand Analysis
Demand Analysis :
Demand refers to the quantity of a commodity that customers are willing to buy at a given price over a specified period of time. Law of Demand states that quantity demanded varies inversely with price of the commodity, that means, people will buy more at lower price and buy less at higher price, other factors remaining same.
Elasticity of Demand :
Elasticity of Demand for a commodity is the measure or degree of change in the quantity demanded in response to a given price of the commodity.
ED = Percentage change in Demand of the commodity
Percentage change in Price of the commodity
Elasticity of Demand
• Perfectly inelastic demand (ED = 0)
The demand of a commodity is said to be perfectly inelastic when quantity demanded does not change at all in response to change in its price. Eg. Salt.
• Less than unit elastic demand (ED < 1)
The demand of a commodity is said to be less than unit elastic when the percentage change in quantity demanded is less than the percentage change in the price of the commodity. Eg. Sugar.
• Unit elastic demand (ED = 1)
The demand of a commodity is said to be unit elastic when the percentage change in quantity demanded is equal to the percentage change in the price of the commodity. Eg.
Clothes.
• More than unit elastic demand (ED > 1)
The demand of a commodity is said to be more than unit elastic when the percentage change in quantity demanded is more than the percentage change in the price of the commodity. Eg. Petrol.
• Perfectly elastic demand (ED = )
The demand of a commodity is said to be perfectly elastic when quantity demanded changes to a great extent in response to a very small change in its price. It is a hypothetical concept. Supply Analysis
Supply refers to the quantity of a commodity offered for sell at all possible prices during a specified period of time. Law of Supply states that supply of quantity of a commodity varies directly with price of the commodity, that
Demand refers to the quantity of a commodity that customers are willing to buy at a given price over a specified period of time. Law of Demand states that quantity demanded varies inversely with price of the commodity, that means, people will buy more at lower price and buy less at higher price, other factors remaining same.
Elasticity of Demand :
Elasticity of Demand for a commodity is the measure or degree of change in the quantity demanded in response to a given price of the commodity.
ED = Percentage change in Demand of the commodity
Percentage change in Price of the commodity
Elasticity of Demand
• Perfectly inelastic demand (ED = 0)
The demand of a commodity is said to be perfectly inelastic when quantity demanded does not change at all in response to change in its price. Eg. Salt.
• Less than unit elastic demand (ED < 1)
The demand of a commodity is said to be less than unit elastic when the percentage change in quantity demanded is less than the percentage change in the price of the commodity. Eg. Sugar.
• Unit elastic demand (ED = 1)
The demand of a commodity is said to be unit elastic when the percentage change in quantity demanded is equal to the percentage change in the price of the commodity. Eg.
Clothes.
• More than unit elastic demand (ED > 1)
The demand of a commodity is said to be more than unit elastic when the percentage change in quantity demanded is more than the percentage change in the price of the commodity. Eg. Petrol.
• Perfectly elastic demand (ED = )
The demand of a commodity is said to be perfectly elastic when quantity demanded changes to a great extent in response to a very small change in its price. It is a hypothetical concept. Supply Analysis
Supply refers to the quantity of a commodity offered for sell at all possible prices during a specified period of time. Law of Supply states that supply of quantity of a commodity varies directly with price of the commodity, that