Economics

• Types of elasticity of demand
  

• Price elasticity

Used as a measure of the responsiveness of demand to changes in the commodities of price.

Types of Price elasticity 

If ep=0; the demand is perfectly inelastic

If ep=1; the demand has unitary elastic

If ep=∞; the demand is perfectly elastic

If 0<e<1; the demand is inelastic

If 1<e<∞; the demand is elastic

• Income elasticity

It is defined as the proportionate change in the quantity demanded resulting from a proportionate change in income.

Ey= dQ/dY  X  Y/Q

• Cross elasticity

It is defined as the proportionate change in the quantity demanded of ‘X’ resulting from a proportionate change in the price of ‘Y”.

Exy=dQx/dPy. Py/Qx

• Methods for measuring price elasticity of demand
  

There are basically four ways by which we can measure price elasticity of demand. These methods are

• Percentage method
  
• Total outlay method
  
• Point method
  
• Arc method