![]() ![]() The result obtained from this formula determines the intensity of the effect of price change on the quantity demanded for a commodity. PED = % Change in Quantity Demanded % / Change in Price The mathematical formula given to calculate the Price Elasticity of Demand is: This measure of responsiveness of quantity demanded when there is a change in price is termed as the Price Elasticity of Demand (PED). For example, when there is a rise in the prices of ceiling fans, the quantity demanded goes down. Let us look at them in detail and their examples.Īny change in the price of a commodity, whether it’s a decrease or increase, affects the quantity demanded for a product. On the basis of different factors affecting the quantity demanded for a product, elasticity of demand is categorized into mainly three categories: Price Elasticity of Demand (PED), Cross Elasticity of Demand (XED), and Income Elasticity of Demand (YED). “The elasticity (or responsiveness) of demand 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”. We will read about these in detail, later in the blog. The demand for a commodity is affected by different economic variables: In other words, the elasticity of demand is the percentage change in quantity demanded divided by the percentage change in another economic variable. It measures the shift in demand when other economic factors change. Let’s begin our blog with a definition of Elasticity of Demand and then we will explore the different types of Elasticity of Demand.Īlso, read our blog on 4 types of Elasticity in economicsĮlasticity of Demand, or Demand Elasticity, is the measure of change in quantity demanded of a product in response to a change in any of the market variables, like price, income etc. There are several factors that affect the quantity demanded for a product such as the income levels of people, price of the product, price of other products in the segment, and various others. ![]() Elasticity is a concept in economics that talks about the effect of change in one economic variable on the other.Įlasticity of Demand, on the other hand, specifically measures the effect of change in an economic variable on the quantity demanded of a product. ![]()
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