Demand Analysis & Elasticity of Demand Commerce YouTube Lecture Handouts Part 2

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Demand Analysis & Elasticity of Demand Commerce

Individual DEMAND & Market DEMAND

Individual demand is the demand on the part of a single consumer at various prices per time period.

Individual DEMAND & Market DEMAND

Market demand is the aggregate of the demand of all the consumers taken together at various prices per time period.

Market DEMAND

Movement & Shift in Demand Curve

  • Movement along a demand curve occurs due to changes in the price of the good (P) itself.
  • Movement can be expansion or contraction of demand.
Movement & Shift in Demand Curve
  • Shift can be increase or decrease in demand.
  • Shift of the demand curve occurs due to changes in:
    • Price of other good (P) ,
    • Income of the consumers (Y) , or
    • Tastes of the consumers
Shift of the Demand Curve Occurs Due to Changes

Elasticity of DEMAND

Price elasticity of demand measures percentage change in the quantity demanded of a good due to a percentage change in its price.

Therefore, can be calculated as

Measurement of Price Elasticity of DEMAND

The three methods of measuring are:

  • Outlay or expenditure method
  • Percentage or proportionate method
  • Geometric or point method.

MCQs

1. A commodity՚s demand relates to:

1. Desire for the commodity

2. Quantity desired of that commodity

3. Need for the commodity

4. Quantity demanded at a specified price within a given period of time

2. Movement along the same demand curve shows:

1. Increase and decrease of demand

2. Expansion of supply

3. Expansion and contraction of demand

4. Expansion of demand

3. The price of candles increases by 22 % and the quantity demanded falls by 25 % this indicates that demand for candles is:

1. Unitary Elastic

2. Elastic

3. Inelastic

4. Perfectly Inelastic

Developed by: