ELASTICITY OF DEMAND
The elasticity of demand refers to the degree of responsiveness of the quantity demanded due to a change in price. In simple terms elasticity of demand means a degree of change in quantity demanded due to a change in the price of the commodity.
Types of elasticity of demand
There are three types of elasticity of demand.
1) Price elasticity of demand: Price elasticity of demand refers to a change in quantity demanded due to a change in the price of the commodity.
2) Income elasticity of demand: Income elasticity of demand refers to a change in quantity demanded due to a change in the income of the commodity.
3) Cross elasticity of demand: Cross elasticity of demand refers to a change in quantity demanded due to a change in the price of another commodity (complementary or substitute commodities.