Elasticity

1
Elasticity

• The coefficient of elasticity is a measure of the
  responsiveness of a dependent variable to a
  change in an independent variable.

2
Most Widely Used Elasticities

• Price-Elasticity of Demand
• Price-Elasticity of Supply
• Cross-Elasticity of Demand and
• Income-Elasticity of Demand

3
Price-Elasticity of

• Demand ( EP ) is a measure of responsiveness of
  quantity demanded to changes in price.

• Supply ( ES ) is a measure of responsiveness of
  quantity supplied to changes in price.

4
Determinants of Price-Elasticity of Demand ( EP )

• Necessity or Luxury
• Availability of Close Substitutes
• Share of Budget Absorbed and
• Length of Time Considered.

5
Elasticity and Total Expenditure