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    Elasticity_of_Demand_Class_11_Enhanced

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    Hwja

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    Copyright:

    © All Rights Reserved
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    Download as pdf or txt
    4 views6 pages

    Elasticity_of_Demand_Class_11_Enhanced

    Uploaded by

    DEVENDER Sharma
    Hwja

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Elasticity of Demand - Class 11

    This document provides a detailed explanation of the topic 'Elasticity of Demand' for Class 11

    Economics. It includes types, factors, real-life examples, and graphical illustrations.


    Index

    1. Introduction .......................................................... 1

    2. Types of Elasticity of Demand ........................................ 2

    2.1 Price Elasticity of Demand ....................................... 2

    2.2 Income Elasticity of Demand ...................................... 3

    2.3 Cross Elasticity of Demand ....................................... 4

    3. Factors Affecting Elasticity of Demand ................................ 5

    4. Real-Life Examples .................................................... 6

    5. Graphical Representations ............................................. 8

    6. Importance of Elasticity of Demand .................................... 10

    7. Conclusion ............................................................ 11
    1. Introduction

    Elasticity of demand measures how much the quantity demanded of a good responds to changes in

    price, income, or other factors. This concept is vital in economics to analyze consumer behavior and

    market trends.
    2. Types of Elasticity of Demand

    2.1 Price Elasticity of Demand:

    - Formula: PED = (% Change in Quantity Demanded) / (% Change in Price)

    - Types include perfectly elastic, elastic, unitary, inelastic, and perfectly inelastic demand.

    2.2 Income Elasticity of Demand:

    - Formula: YED = (% Change in Quantity Demanded) / (% Change in Income)

    - Distinguishes between normal and inferior goods.

    2.3 Cross Elasticity of Demand:

    - Formula: XED = (% Change in Quantity Demanded of Good A) / (% Change in Price of Good B)

    - Differentiates substitutes and complements.


    4. Real-Life Examples

    1. **Price Elasticity of Demand**:

    - Luxury Cars: Demand is highly elastic because luxury cars are not necessities. A small increase

    in price may lead to a significant decrease in demand.

    - Salt: Demand is inelastic as it is a necessity, and price changes have little impact on quantity

    demanded.

    2. **Income Elasticity of Demand**:

    - Normal Goods: As income rises, people buy more organic foods, branded clothes, or electronics.

    - Inferior Goods: With increased income, consumers buy less of low-quality or generic goods like

    basic instant noodles.

    3. **Cross Elasticity of Demand**:

    - Substitutes: If the price of tea increases, demand for coffee may rise.

    - Complements: If the price of smartphones decreases, demand for accessories like phone cases

    may increase.
    5. Graphical Representations

    Graphs are essential for visualizing elasticity concepts. Below are some examples:

    1. **Price Elasticity of Demand Graph**:

    - Elastic Demand: A relatively flat demand curve showing significant quantity changes for small

    price changes.

    - Inelastic Demand: A steep demand curve showing minor quantity changes for large price

    changes.

    2. **Income Elasticity of Demand Graph**:

    - Normal Goods: Upward-sloping curve as income and demand both increase.

    - Inferior Goods: Downward-sloping curve as higher income decreases demand.

    3. **Cross Elasticity of Demand Graph**:

    - Substitutes: Positive slope as higher prices of one good increase demand for another.

    - Complements: Negative slope as higher prices of one good decrease demand for another.

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