Price Elasticity of Demand:-
It is all about percentage change of Quantity demand followed by percentage change in price(How demand respond when there is a change in price)
Mathematically-
Ped=P/Q*dQ/dP
The price elasticity of demand for any good measures how willing consumers are to buy less of the good as its price rises.
For example:-
1.Cadbury bournville-If price of Cadbury bournville increases people will switch to alternative types of chocolate bar like Dairymilk Silk.
2.Harley Davidson bikes-If Harley Davidson increases in price,demand will probably be elastic because it is a high percentage of income.Infact there are other alternatives like Suzuki Hayabusa,Ducati.But some bike enthusiasts may want to buy a Harley Davidson whatever the price is.
It is all about percentage change of Quantity demand followed by percentage change in price(How demand respond when there is a change in price)
Mathematically-
Ped=P/Q*dQ/dP
The price elasticity of demand for any good measures how willing consumers are to buy less of the good as its price rises.
For example:-
1.Cadbury bournville-If price of Cadbury bournville increases people will switch to alternative types of chocolate bar like Dairymilk Silk.
2.Harley Davidson bikes-If Harley Davidson increases in price,demand will probably be elastic because it is a high percentage of income.Infact there are other alternatives like Suzuki Hayabusa,Ducati.But some bike enthusiasts may want to buy a Harley Davidson whatever the price is.
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