DEMAND & ELASTICITY

DEFINITIONOF DEMAND

One has need , have capacity to by and make decision to by, the demand comes in the market. OR

The demand for anything at a given price is the amount of it, which will be bought per unit of time at that price.

ELASTICITY:

Change in demand caused by change in price of commodity in explained as elasticity.

TYPES OF ELASTICITY:

1- PRICE ELASTICITY:(Affect )

2- INCOME ELASTICITY: (Demand may increases by the increase in income)

3- CROSS ELASTICITY(Same as change in price of related good)

4- SUBSTITUTION ELASTICITY(Same as substitution for good)

INFLUENCE OF ELASTICITY ON DEMAND

1- Own price (Due to price of good)

2- Average Income (Due to limited income)

3- Population (Essential needs rises due to increase in population and nonessential goods demand decreased)

4- Consumer Habits/Taste(Due to special tasks or habit)

5- Possibilities of Substitution(If the very close substitute in available with attractive low price it effects the demand of actual so elasticity appears)

6- Price of Related good(Same are related goods)

In general elasticity depend on Own price, income, cross and substitution.