Elasticity of Demand
The elasticity of demand refers to the sensitivity of the demand for a good to the differences in other economic variables such as prices and customer benefits. Higher demand elasticity for an economic variable indicates that the customers are more conscious of changes in this variable.
Types of Elasticity of Demand
- Price elasticity of demand
- Cross elasticity of demand
- Income elasticity of demand
- Advertisement elasticity of demand
Measurement of Price Elasticity of Demand
Primarily, there are three methods of measuring the price elasticity of demand.
- Proportionate/Percentage method
- Total expenditure or Total outlay method
- Geometric method
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