Friday, July 20, 2018

Price elasticity of demand


Price elasticity of demand is the effect of price on the demand of any commodity. Both of the things are inversly proportional to each other . If there is fall in price demand will increase and if the price of a commodity increase its demand gradually decreases. Keeping all the external factors remains the same. It is the change in quantity demanded to the change in price.
It is exceptional for few products such as sugar ,salt ,rice because there is no replacement for these necessary goods.
 Formula for price elasticity of demand (Ed) is

           Ed =∆Q/Q ÷ ∆P/ P
Where Q is quantity .
          ∆Q is change in quantity.
            P is price.
          ∆P is change in price.
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