Backbone of marketing, the ELASTICITY OF DEMAND.

ELASTICITY:- It is a degree to which individuals, consumer's or producers change their demand or the amount supplied in response to price or change in income. 

Elasticity of DEMAND:- The responsiveness of the quality demanded of a good to change in one of the variable on which demands depends.

TYPES-

• PRICE ELASTICITY: It express the response of quantity demanded of a good to a change in its price, given the consumer's income,his taste and price of all other goods.

Price elasticity: % change in quantity demand

       (Ep)               % change in Price

• POINT ELASTICITY: We measure elasticity at a given point on a deland curve. Point elasticity makes use of derivative rather then finite changes in the price and the quantity.

Also defined as: -dq  × _p 

                              dp.      q

Where dp  is derivative of quantity with respect 

             dp.    to price to a point on demand curve (fig no. 1)

• ARC ELASTICITY: When the price change is some what larger or when price elasticity is to be found between two price [or how points on the demand curve in FIG.2]