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Price Elasticity of Demand, Formula, Calculator, Examples

Elasticity of Demand Formula

Elasticity of Demand Formula in Economics is an important concept for students preparing for examinations where economy has a weightage. Elasticity of Demand can be defined as the degree to which the effective demand for a commodity changes with change in the price of that commodity. Generally, it has been observed that demand of certain commodity changes variation in their prices. We can find the Elasticity of Demand, or the responsive degree of Demand by comparing the percentage of change in Price with the quantity of the Demand of that commodity. If the response to price is complete and infinite i.e, a change in price results in the quantity falling to zero, it is referred as Perfectly elastic. Perfectly inelastic means that there is no change in quantity at all when price changes.

Elasticity of Demand Formula Examples

We can understand this concept by some examples. Take the example of Crude oil. When price of Crude oil decreases in international market, countries like India tries to buy as much as possible and store it for future uses when the price will increase.

Another example can be that of Air Conditioner. Suppose price of Air Conditioner drops unimaginably low, then more people will tend to purchase it.

The Price of Elasticity of Demand Formula

The Price Elasticity of Demand can be defined as an economic measure of the change in the demand or purchase of the product with respect to its Price change.

Elasticity of the Demand formula can be expressed as:

Percentage change in quantity/ Percentage change in demand.

This measurement is calculated by taking the percentage change in the quantity demanded of a particular good in numerator and the percentage change in the Price of the other good in denominator.

When elasticity is higher than 1, it signifies products have an elastic demand. That means higher the price, lower the demand.

Elasticity Of Demand Formula Calculator

Elasticity Of Demand Formula Calculator helps us decide whether it’s more profitable to sell more goods at a low price or more goods at a high price. It establish the perfect price for the concerned products.

Elasticity of Demand Formula – FAQs

Q. What is the Elasticity of Demand Formula?

Ans. It is the Percentage change in quantity/ Percentage change in demand.

Q. How does Elasticity Of Demand Formula Calculator helps us?

Ans. Elasticity Of Demand Formula Calculator helps us decide whether it’s more profitable to sell more goods at a low price or not.

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