ELASTIC DEMAND INELASTIC DEMAND

11. elastic demand

inelastic demand

1.      Meaning If the % change in quantity demanded of a commodity is infinite or more than proportionate to any % change in its price, the demand is said to be elastic demand. 2.      Types There are two types of elastic demand. They are (a) Perfectly elastic demand. (a)   Relatively elastic demand. 3.      Numerical Value The numerical value of perfectly elastic demand is infinite and the numerical value of relatively elastic demand is greater than 1 (>1) 4.      Examples a)      For perfectly elastic demand- demand for the atmospheric air for breathing. b)      For relatively elastic demand-demand for comports and luxuries, e.g. car, air conditioners etc.

If the % change in quantity demanded of a commodity is Zero or less than proportionate to any % change in its price, the demand is said to be inelastic demand. There are also two types of inelastic demand. They are (a) Perfectly inelastic demand. Relatively inelastic demand It depends on the demand for other goods and services. The numerical value of perfectly inelastic demand is Zero and the numerical value of relatively elastic demand is lesser than 1 (<1) (1)   For perfectly inelastic demand-demand for absolute necessities such as food for survival, basic clothes, salt, etc. (2)   For relatively inelastic demand-demand for some habituated goods such as liquor for drunkards, cigarettes for smokers, etc.