Types of Elasticity Demand

ELASTICITY OF DEMAND

Elasticity of demand may be defined as the ratio of the percentage change in demand to the percentage change in price.

Ep= Percentage change in amount demanded / Percentage change in price

TYPES OF ELASTICITY DEMAND

i. Price elasticity of de mand: Elasticity of demand ma y be defined as the ratio of the percentage change in price.

Ep = percentage change in quantity demanded / percentage change in price

ii. Income elasticity of de mand: The income elasticity of demand (Ey) e xpress the responsiveness of a consumer demand or expenditure or consumption) for any good to the change in his income .it ma y be defined as the ratio of percentage change in the quantity demanded of a commodity to the percentage in income. Thus

Ey = percentage change in quantity demanded / percentage change in income

iii. Cross  elasticity  of  demand:  The  cross  elasticity  of  demand  is  the  relation  between

percentage change in the quantity demand ed of a good to the percentage change in the price of a related good. The cross elasticity good A and good B is

Eba= percentage change in the quantity demanded of B/ percentage change in price of A