1. SEMINAR PRESENTATION
Topic : Price Elasticity Of Demand
Name : Raghav Kapahi
Class : B.Com. ( Hons.)
Roll No. : 29-HBCM-11
E-Mail Id : raghavkapahi@gmail.com
1

2. LAW OF DEMAND states that there is a inverse relation
between PRICE of product and its DEMAND , i.e. when
price of a product rises its demand falls & vice versa .
Ques. When price rises, what happens to demand?
Ans : Demand falls.
BUT ..! BUT..! BUT..!
The next question which arises is :
How much does demand falls.
And answer to this question is :

3. PRICE
ELASTICITY
Of
DEMAND
3

4. PRICE ELASTICITY OF DEMAND (edp) :
“Price Elasticity of Demand is the measure of degree of
change in the amount demanded of commodity in response to
a given change in price of the commodity.”
“Elasticity of Demand for the commodity is the rate as which
quantity bought changes as the price changes.” ~Cairncross
“Elasticity of Demand measures the responsiveness of demand
to changes in price.” ~Boulding
Price Elasticity of Demand is the percentage change in the
quantity demanded divided by percentage change in the
price.
% change in Demand
edp =
% change in Price
4

5. • Law of Demand indicates only the direction of change in quantity
demanded in response to change in price,
But Elasticity of Demand states that how much or to what extent the
quantity demanded will change in response to change in its price.
 If price rises by 10% - what happens to demand?
 We know demand will fall
 By more than 10%?
 By less than 10%?
 Elasticity measures the extent to which demand will
change.
And this, gives us five different Degrees Of
Price Elasticity Of Demand:

6. DEGREES of PRICE ELASTICITY of DEMAND :
1. Unitary elastic demand. (edp = 1 )
2. Perfectly elastic demand. (edp = ∞ )
3. Perfectly inelastic demand. (edp = 0 )
4. Relatively elastic demand. (edp > 1 )
5. Relatively inelastic demand. (edp < 1 )
6

7. 1. Unitary Elastic Demand : (edp = 1)
When degree of change in demand equals to the change
in price.
y
Under unitary
elasticity, demand moves with
Unitary elastic
the price. y2
In this case change in demand
Price
is equal to change in price.
y1
So the demand curve in this
case is a straight line which
moves downwardly from left to x2 x
X1
right. Quantity demanded
7

8. 2. PERFECTLY ELASTIC DEMAND : (edp = ∞)
When there is infinitely large change in demand with
slight change in price.
y
Here, with a slightly change in
price the demand changes
infinitely.
Price Perfectly elastic
And the demand curve
in case of perfectly elastic
demand is horizontal to x-axis.
x
Quantity demanded
8

9. 3.PERFECTLY INELASTIC DEMAND : (edp = 0)
When there is no effect on demand with the change in
price.
y
Under perfectly inelastic
demand, whatever the
price may be the amt. of
Perfectly
quantity demanded Price
inelastic
remains same .
It applies in case of
necessary goods like
salt, medicines etc. x
Quantity demanded
Perfectly inelastic demand, gives a vertical straight line.
9

10. 4. RELATIVELY ELASTIC DEMAND : (edp > 1)
When degree of change in demand is more than degree
of change in price.
y
Relatively Elastic
demand, states that the demand
changes more than the price. Relatively
It mostly happens in case of y2 Elastic
Price
comfort goods like fruits, TV etc.
y1
Demand curves in case of
Elastic Demand are gently
sloped. x2 x
X1
Quantity demanded

11. 5. RELATIVELY INELASTIC DEMAND : (edp < 1)
When degree of change in demand is less than the degree of
change in price.
y
And in the end, relatively
Inelastic Demand, demand Relatively
changes less than the change in y1 Inelastic
price. Price
It is possible in case of normal
goods which we use daily. y2
Demand curves in case of
inelastic demand are more
steeper. X1 x2 x
Quantity demanded
11

12. 12