Compact Glossary of Elasticities of Demand

PRICE ELASTICITIES A relationship is described as Perfectly elastic or infinitely elastic     When the elasticity value is Infinity Which means that The smallest possible increase (decrease) in price causes an infinitely large decrease (increase) in the quantity demanded. Elastic Less than infinity but greater than 1 The percentage decrease (increase) in the quantity […]

Cross Elasticity of Demand

Cross elasticity of demand refers to a change in the quantity demanded of product A as s result of a change in the product B. When demand for a product changes due to a change in the price of another related commodity we have cross elasticity of demand. The formula for cross elasticity is, EAB […]

Elasticity of Demand

  By now we have already come to know from the law of demand that, when the price of a good increase, the quantity demanded falls, other things remaining the same. But, this information is not of much practical use since we know only the direction of change in the demand for a given change […]