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Understanding The Concept Of Elasticity Of Demand (for UPSC CSE)
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This lesson will clear all your doubts with respect to elasticity of Demand. Ayussh explains the meaning of Elasticity of Demand along with the Formula. Thereby light is thrown on the significance of Elasticity of Demand. Also, various factors like availability of substitutes, necessities goods, luxury goods and many more are discussed which determine the price elasticity of Demand.

Ayussh Sanghi is teaching live on Unacademy Plus

Ayussh Sanghi
Passionate Educator - CSE / Other Govt Exams [Peep into my Unacademy Plus Courses & experience awesome learning.]

Unacademy user
sir aapse padte samay bacche kabhi bhi bor nhi hote ,interest ke sath padte h
Hello Sir you are saying that inelastic good is when denominator is greater than numerator and when it is less than 1. But in 4.43 min. you are saying that oppositely. Can you please brief it again
sir please correct me if i am wrong , necessites good are elastic in nature and luxury goods are inelastic in nature.
Mousam Mohanty
2 years ago
No it is vice versa....
I couldn't able to find the contribute button
Isn't airline tickets prices are examples of shift in demand curve??
Sir necessity good are inelastic how???
Geetanjali Jha
2 years ago
yeah inelastic because we dont demand a doctor anyway, becoz we know the fees are high,the price of medicine is high but its our neccessity, we take medicine but our motive is not to buy more medicine as their price are too high, hence its inelastic.Am I right?
Shubham Dhande
2 years ago
thnk you yes u r right

  2. ABOUT ME Passionate about Teaching >Taught at most reputed Civil Services Institutes >CA, Lawyer Follow me on: AyusshSanghi

  3. ELASTICITY OF DEMAND o According to the law of demand, o "A fall in the price of a good raises it's quantity demanded." From the above concept l Demand: o From the above concept let's understand Elasticity of o The price elasticity of demand measures the response of change in quantity demanded to change in price.

  4. ELASTICITY OF DEMAND Formula: Elasticity of demand-Percentage change in quantity demanded/ percentage change in price As per law of demand the price elasticity of demand is always negative as price and quantity demanded move in opposite directions. Demand for a good is said to be elastic if the quantity demanded responds substantially to changes in the price. Demand is said to be inelastic if the quantity demanded responds only slightly to changes in the priced

  5. ELASTICITY OF DEMAND Conclusion Elastic - Demand for a good is considered to be elastic if the quantity demanded responds substantially to change in the price. Inelastic - Demand is said to be inelastic if the quantity demanded responds slightly to change in the price.

  6. ELASTICITY OF DEMAND o We come to know about how willing consumers are to move away from the good as its price rises The price elasticity of demand for any good measures the consumer behaviour.

  7. ELASTICITY OF DEMAND Thus, the elasticity reflects the many: economic factors o social factors and psychological factors, that shape consumer tastes. O t

  8. WHAT DETERMINES PRICE ELASTICITY OF DEMAND? o There are certain factors that determine price elasticity of demand. In this segment we would discuss each of those in order to understand how Price Elasticity of Demand is affected.

  9. AVAILABILITY OF SUBSTITUTES Goods with substitutes tend to have more elastic demand because it is easier for consumer to switch from that good to others. o Example: Tea and Coffee are substitutes of each other. A small increase in the price of tea, assuming the price of coffee is held constant, causes the quantity of tea sold to fall by a large amount.

  10. NECESSITIES GOODS AGAINST LUXURY GOODS Necessities have inelastic demands as against luxuries which have elastic demands. Example 1: When the price of a visit to a doctor increases, people will not alter the number of times they go to the doctor. Example 2: When the price of LED rises, the quantity of LED's demanded falls substantially. o The reason is that most people view doctor visits as a necessity and LED as a luxury. Whether a good is a necessity or a luxury depends not on the properties of the good but on the preference of the buyer.