{"id":5994,"date":"2021-09-14T15:46:44","date_gmt":"2021-09-14T10:16:44","guid":{"rendered":"https:\/\/scholarsclasses.com\/blog\/?p=5994"},"modified":"2025-10-07T19:47:19","modified_gmt":"2025-10-07T14:17:19","slug":"12th-economics-chapter-3b","status":"publish","type":"post","link":"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/","title":{"rendered":"12th Economics Chapter 3B (Elasticity of Demand) Maharashtra Board &#8211; Free Solution"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69de2dd6f06f1\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69de2dd6f06f1\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#12th_Economics_Chapter_3B_%E2%80%93_Elasticity_of_Demand\" >12th Economics Chapter 3B &#8211; Elasticity of Demand<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Chapter_3B_%E2%80%93_Elasticity_of_Demand\" >Chapter 3B &#8211; Elasticity of Demand<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Q_1_Complete_the_following_statements_by_choosing_the_correct_alternatives\" >Q. 1. Complete the following statements by choosing the correct alternatives<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Q_2_Give_economic_terms\" >Q. 2. Give economic terms<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Q_3_Complete_the_correlation\" >Q. 3. Complete the correlation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Q4_Assertion_and_Reasoning_type_questions\" >Q.4. Assertion and Reasoning type questions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Q5_Distinguish_between\" >Q.5. Distinguish between<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Q6_Answer_the_following_questions\" >Q.6. Answer the following questions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Q7_Observe_the_following_figure_and_answer_the_questions\" >Q.7. Observe the following figure and answer the questions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Extra_Questions\" >Extra Questions<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Distinguish_Between\" >Distinguish Between:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Answer_the_following_questions\" >Answer the following questions:<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/#Check_out_other_posts_related_to_the_12th_Commerce\" >Check out other posts related to the 12th Commerce<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"12th_Economics_Chapter_3B_%E2%80%93_Elasticity_of_Demand\"><\/span>12th Economics Chapter 3B &#8211; Elasticity of Demand<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>12th Economics Chapter 3B &#8211; Elasticity of Demand:<\/strong> The law of demand does not explain the extent of a change in demand due to a change in the price. Thus, the law of demand fails to explain the quantitative relationship between price and quantity demanded. Therefore, Prof. Alfred Marshall explained the concept of elasticity of demand.<\/p>\n\n\n\n<p>This chapter will explain the elasticity of demand, its types, factors, importance, etc. To understand these topics, read <strong>Elasticity of Demand<\/strong> solutions prepared by our experts.<\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong>We covered extra questions in each chapter.<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading has-text-align-center has-black-color has-vivid-green-cyan-background-color has-text-color has-background has-medium-font-size\"><span class=\"ez-toc-section\" id=\"Chapter_3B_%E2%80%93_Elasticity_of_Demand\"><\/span><strong>Chapter 3B<\/strong> &#8211; Elasticity of Demand<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q_1_Complete_the_following_statements_by_choosing_the_correct_alternatives\"><\/span>Q. 1. Complete the following statements by choosing the correct alternatives<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>1) Price elasticity of demand on a linear demand curve at the X-axis is _____.<br><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">a) zero <br><\/mark><\/strong>b) one<br>c) infinity <br>d) less than one<\/p>\n\n\n\n<p><strong>2) Price elasticity of demand on a linear demand curve at the Y-axis is equal to _____.<br><\/strong>a) zero <br>b) one<br><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">c) infinity<br><\/mark><\/strong>d) greater than one<\/p>\n\n\n\n<p><strong>3) Demand curve is parallel to X-axis, in the case of _____.<\/strong><br><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">a) perfectly elastic demand<br><\/mark><\/strong>b) perfectly inelastic demand<br>c) relatively elastic demand<br>d) relatively inelastic demand<\/p>\n\n\n\n<p><strong>4) When the percentage change in quantity demanded is more than the percentage change in price, the demand curve is _____.<\/strong><br><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">a) flatter<br><\/mark><\/strong>b) steeper<br>c) rectangular<br>d) horizontal<\/p>\n\n\n\n<p><strong>5) Ed = 0 in case of _____.<br><\/strong>a) luxuries<br>b) normal goods<br><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">c) necessities<br><\/mark><\/strong>d) comforts<\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-resized\"><img decoding=\"async\" width=\"1024\" height=\"576\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/05\/12th-Economics-Chapter-3B-1024x576.webp\" alt=\"12th Economics Chapter 3B - Elasticity of Demand\" class=\"wp-image-18882 lazyload\" style=\"--smush-placeholder-width: 1024px; --smush-placeholder-aspect-ratio: 1024\/576;width:720px;height:auto\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/05\/12th-Economics-Chapter-3B-1024x576.webp 1024w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/05\/12th-Economics-Chapter-3B-300x169.webp 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/05\/12th-Economics-Chapter-3B-768x432.webp 768w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/05\/12th-Economics-Chapter-3B-1536x864.webp 1536w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2022\/05\/12th-Economics-Chapter-3B.webp 1920w\" data-sizes=\"(max-width: 1024px) 100vw, 1024px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q_2_Give_economic_terms\"><\/span>Q. 2. Give economic terms <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1) Degree of responsiveness of quantity demanded to change in income only. <strong><span style=\"text-decoration: underline;\">Income Elasticity of Demand.<\/span><\/strong><\/p>\n\n\n\n<p>2) Degree of responsiveness of a change in quantity demanded of one commodity due to change in the price of another commodity. <strong><span style=\"text-decoration: underline;\"><strong>Cross Elasticity of Demand.<\/strong><\/span><\/strong> <\/p>\n\n\n\n<p>3) Degree of responsiveness of a change of quantity demanded of a good to a change in its price. <br><strong><span style=\"text-decoration: underline;\"><strong>Price Elasticity of Demand.<\/strong><\/span><\/strong><\/p>\n\n\n\n<p>4) Elasticity resulting from infinite change in quantity demanded. <strong><span style=\"text-decoration: underline;\">Perfect Elasticity<\/span><\/strong><\/p>\n\n\n\n<p>5) Elasticity resulting from a proportionate change in quantity demanded due to a proportionate change in price. <strong><span style=\"text-decoration: underline;\"><strong>Unitary Elasticity<\/strong><\/span><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q_3_Complete_the_correlation\"><\/span>Q. 3. Complete the correlation<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1) Perfectly elastic demand : Ed = \u221e : : <strong><span style=\"text-decoration: underline;\">Perfectly inelastic demand<\/span><\/strong> : Ed = 0<\/p>\n\n\n\n<p>2) Rectangular hyperbola : <strong><span style=\"text-decoration: underline;\">Unitary elastic demand <\/span><\/strong>: : Steeper demand curve : Relatively inelastic demand.<\/p>\n\n\n\n<p>3) Straight line demand curve : Linear demand curve : : <strong><span style=\"text-decoration: underline;\">Curved line demad curve<\/span><\/strong> : non linear demand curve.<\/p>\n\n\n\n<p>4) Pen and ink : <strong><span style=\"text-decoration: underline;\">Complementary Goods<\/span><\/strong> : : Tea and Coffee : Substitutes.<\/p>\n\n\n\n<p>5) Ratio method : Ed = %Change in Quantity <strong>\/ <\/strong>%Change in Price : : <strong><span style=\"text-decoration: underline;\">Geometrical Method<\/span><\/strong> : Ed = Lower segment <strong>\/ <\/strong>Upper segment<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q4_Assertion_and_Reasoning_type_questions\"><\/span>Q.4. Assertion and Reasoning type questions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>1) <strong>Assertion (A)<\/strong>: Elasticity of demand explains that one variable is influenced by another variable.<br><strong>Reasoning (R)<\/strong>: The concept of elasticity of demand indicates the effect of price and changes in other factors on demand.<br>Options : <br>1) (A) is True, but (R) is False<br>2) (A) is False, but (R) is True<br>3) Both (A) and (R) are True and (R) is the correct explanation of (A)<br><strong>4) Both (A) and (R) are True and (R) is not the correct explanation of (A)<\/strong><\/p>\n\n\n\n<p><strong>2) Assertion (A)<\/strong>: A change in quantity demanded of one commodity due to a change in the price of other commodity is cross elasticity.<br>Reasoning (R): Changes in consumers income leads to a change in the quantity demanded.<br>Options : <br>1) (A) is True, but (R) is False<br>2) (A) is False, but (R) is True<br>3) Both (A) and (R) are True and (R) is the correct explanation of (A)<br><strong>4) Both (A) and (R) are True and (R) is not the correct explanation of (A)<br><\/strong><\/p>\n\n\n\n<p><strong>3) Assertion (A)<\/strong>: Degree of price elasticity is less than one in case of relatively inelastic demand.<br><strong>Reasoning (R)<\/strong>: Change in demand is less then the change in price.<br>Options : <br>1) (A) is True, but (R) is False<br>2) (A) is False, but (R) is True<br><strong>3) Both (A) and (R) are True and (R) is the correct explanation of (A)<br><\/strong>4) Both (A) and (R) are True and (R) is not the correct explanation of (A)<\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" target=\"_blank\" rel=\"noreferrer noopener\">Solution of other subjects<\/a><br><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\">Solution of all Chapters of Economics<br><\/a> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" target=\"_blank\" rel=\"noreferrer noopener\">1<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\">2<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" target=\"_blank\" rel=\"noreferrer noopener\">3A<\/a> &#8211; <strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\">3B<\/a> &#8211;<\/strong> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" target=\"_blank\" rel=\"noreferrer noopener\">4<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">5<\/a><\/strong> <strong>&#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">6<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">7<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">8<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">9<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">10<\/a><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q5_Distinguish_between\"><\/span>Q.5. Distinguish between <span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">1) Relatively elastic demand and Relatively inelastic demand.<\/span><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">Points<\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Relatively elastic demand<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><strong>Unitary elastic demand<\/strong><\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">1)Meaning<\/td><td class=\"has-text-align-center\" data-align=\"center\">When a percentage change in price leads to more than proportionate change in quantity demanded, the demand is said to be relatively elastic. <\/td><td class=\"has-text-align-center\" data-align=\"center\">When a percentage change in price leads to less than proportionate change in the quantity demanded, demand is said to be<br>relatively inelastic.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">2) Numerical Value<\/td><td class=\"has-text-align-center\" data-align=\"center\">The numerical value of elasticity of demand is greater than one.<\/td><td class=\"has-text-align-center\" data-align=\"center\">The numerical value of elasticity of demand is lesser than one.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\"><b>2) <\/b>Perfectly elastic demand and Perfectly inelastic demand.<\/span><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">Points<\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Perfectly elastic demand.<\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong>Perfectly inelastic demand.<\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">1)Meaning<\/td><td class=\"has-text-align-center\" data-align=\"center\">When a slight or zero change in the price brings about an infinite change in the quantity demanded of that commodity, it is called perfectly elastic demand. <\/td><td class=\"has-text-align-center\" data-align=\"center\">When a percentage change in price has no effect on the quantity demanded of a commodity it is called perfectly inelastic demand.<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">2) Numerical Value<\/td><td class=\"has-text-align-center\" data-align=\"center\">The numerical value of elasticity of demand is Infinite.<\/td><td class=\"has-text-align-center\" data-align=\"center\">The numerical value of elasticity of demand is zero.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q6_Answer_the_following_questions\"><\/span>Q.6. Answer the following questions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>1) Explain the factors influencing elasticity of demand.<\/strong><\/mark><\/p>\n\n\n\n<p><strong>Answer:<\/strong> Elasticity of demand depends upon several factors which are discussed below:<\/p>\n\n\n\n<p><strong>1) Nature of commodity:<\/strong><\/p>\n\n\n\n<p>By nature, we can classify commodities as necessities, comforts, and luxury goods. Demand for necessities like food grains, medicines, textbooks, etc. is relatively inelastic, while demand for comforts and luxury goods like cars, perfumes, furniture, etc., is relatively elastic.<\/p>\n\n\n\n<p><strong>2) Availability of substitutes:<\/strong><\/p>\n\n\n\n<p>Demand for a commodity will be more elastic, if its close substitutes are available in the market. For example, lemon juice, sugarcane juice etc. But commodities having no close substitutes like salt the demand will be inelastic.<\/p>\n\n\n\n<p><strong>3) Number of uses:<\/strong><\/p>\n\n\n\n<p>Single use goods have a less elastic demand. Multi-use goods have more elastic demand, For example, coal, electricity etc.<\/p>\n\n\n\n<p><strong>4) Habits:<\/strong><\/p>\n\n\n\n<p>Habits make demand for certain goods relatively inelastic. For example, addicted goods, drugs, etc.<\/p>\n\n\n\n<p><strong>5) Durability:<\/strong><\/p>\n\n\n\n<p>The demand for durable goods is relatively elastic. For example, furniture, washing machine etc. Demand for perishable goods is inelastic. For example, milk, vegetables etc.<\/p>\n\n\n\n<p><strong>6) Complementary goods:<\/strong><\/p>\n\n\n\n<p>The demand for a commodity that is used in conjunction with other commodities to satisfy a single want is relatively inelastic. For example, a fall in the price of mobile handsets may lead to a rise in the demand for sim cards.<\/p>\n\n\n\n<p><strong>7) Income of the consumer:<\/strong><\/p>\n\n\n\n<p>Demand for goods is usually inelastic if the consumer has high income. The demand pattern of a very rich and an extremely poor person is rarely affected by significant changes in the<br>price.<\/p>\n\n\n\n<p><strong>8) Urgency of needs:<\/strong><\/p>\n\n\n\n<p>Goods that are urgently needed will have relatively inelastic demand. For example, medicines. Less urgent luxury goods have relatively elastic demand.<\/p>\n\n\n\n<p><strong>9) Time period:<\/strong><\/p>\n\n\n\n<p>The elasticity of demand is always related to period of time. It varies with the length of time period. Generally speaking, longer the duration of period greater will be the elasticity of demand and vice-versa. This is because a consumer can&nbsp;change their consumption habits in the long&nbsp;run in favour of cheaper substitutes of the&nbsp;commodities.<\/p>\n\n\n\n<p><strong>10) Proportion of expenditure:<\/strong><\/p>\n\n\n\n<p>If the&nbsp;proportion of expenditure in a person&#8217;s&nbsp;income is small, then demand for the product&nbsp;is relatively inelastic. For example, news&nbsp;papers. If the proportion of expenditure&nbsp;is large, then demand for the product is&nbsp;relatively elastic.<\/p>\n\n\n\n<p>Note: If the question is asked for 8 marks write 9 to 10 points and if question is asked for 4 marks write 4 to 6 points ( Use this suggestion for all questions and chapters)<\/p>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>2) Explain the total outlay method of measuring elasticity of demand?<\/strong><\/mark> (Total expenditure method) <\/p>\n\n\n\n<p><strong>Answer:<\/strong> This method was developed by Prof. Marshall. In this method, total amount of expenditure before<br>and after the price change is compared.this method is also known as Total expenditure method.<\/p>\n\n\n\n<p>Here the total expenditure refers to the product of price and quantity demanded.<br><strong>Total expenditure = Price \u00d7 Quantity demanded<br><\/strong>In this connection, Marshall has given the following propositions:<\/p>\n\n\n\n<p><strong>A) Relatively elastic demand (Ed &gt;1):<\/strong> When with a given change in the price of a commodity total outlay increases, elasticity of demand is greater than one.<\/p>\n\n\n\n<p><strong>B) Unitary elastic demand (Ed = 1):<\/strong> When price falls or rises, total outlay does not change or remains constant, elasticity of demand is equal to one.<\/p>\n\n\n\n<p><strong>C) Relatively inelastic demand (Ed &lt;1):<\/strong> When with a given change in price of a commodity total outlay decreases, elasticity of demand is less than one.<\/p>\n\n\n\n<p>This can be explained with the help of the following example.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"473\" height=\"269\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Q-6.png\" alt=\"Total expenditure method\" class=\"wp-image-6110 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Q-6.png 473w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Q-6-300x171.png 300w\" data-sizes=\"(max-width: 473px) 100vw, 473px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 473px; --smush-placeholder-aspect-ratio: 473\/269;\" \/><\/figure>\n\n\n\n<p>In the above table, in example \u2018A\u2019 original price is Rs 10 per unit and quantity demanded is 6 units. Therefore, total expenditure incurred is Rs 60. When price rises to Rs 20 quantity demanded falls to 5 units, the total expenditure incurred is Rs 100. In this case, total outlay is greater than original expenditure. Hence, in this example elasticity of demand is greater than one. (Ed &gt;1) that is relatively elastic demand.<\/p>\n\n\n\n<p>In example \u2018B\u2019, original price is Rs 30 per unit and quantity demanded is 4 units. Therefore total expenditure is Rs 120. When price rises to Rs 40 quantity demanded falls to \u20183\u2019 units. Total expenditure incurred is Rs120. In this case total outlay is same (equal) to original expenditure. Hence, in this example, elasticity of demand is equal to one (Ed = 1) that is unitary elastic demand.<\/p>\n\n\n\n<p>In example \u2018C\u2019, original price is Rs 50 per unit and quantity demanded is 2 units. Therefore total expenditure is Rs 100. When price rises to Rs 60, quantity demand falls to 1 unit and total expenditure incurred is Rs 60. In this case total outlay is less than original expenditure. Hence, elasticity of demand is less than one (Ed &lt;1) that is relatively inelastic demand.<\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">3) Explain importance of elasticity of demand.<\/span><\/strong><\/p>\n\n\n\n<p><strong><strong>Answer: <\/strong><\/strong>The concept of elasticity of demand is of great importance to producers, farmers, workers and the Government. Lord Keynes considered this concept to be the most important contribution of Alfred Marshall. The significance of the concept becomes clear from the following applications<\/p>\n\n\n\n<p><strong>1) Importance to a Producer:<\/strong><\/p>\n\n\n\n<p>Every producer has to decide the price of his product at which he has to sell it. For this purpose, elasticity of demand becomes important. If the demand for a product is relatively inelastic, he will fix up a higher price and vice-versa. The concept of elasticity of demand is also useful to a monopolist to practice price discrimination.<\/p>\n\n\n\n<p><strong>2) Importance to Government:<\/strong><\/p>\n\n\n\n<p>Taxation policy of the Government is based on the concept of elasticity of demand. Those commodities whose demand is relatively inelastic will be taxed more because it will not affect their demand much and vice-versa.<\/p>\n\n\n\n<p><strong>3) Important in Factor Pricing:<\/strong><\/p>\n\n\n\n<p>The concept of elasticity of demand is useful in determination of factor prices. The factor of production for which demand is relatively inelastic can command a higher price as compared to those having elastic demand. For example, workers can ask for higher wages, if the demand for the product produced by them is relatively inelastic.<\/p>\n\n\n\n<p><strong>4) Importance in Foreign Trade:<\/strong><\/p>\n\n\n\n<p>The concept of elasticity of demand is useful to determine terms and conditions in foreign trade. The countries exporting commodities for which demand is relatively inelastic can raise their prices. For example, OPEC have increased the price of oil several times. The concept is also useful in formulating export and import policy of a country.<\/p>\n\n\n\n<p><strong>5) Public Utilities:<\/strong><\/p>\n\n\n\n<p>In case of public utilities like railways which have an inelastic demand, the Government can either subsidize or nationalise them to avoid consumer exploitation.<\/p>\n\n\n\n<p><strong>6) Proportion of expenditure:<\/strong><\/p>\n\n\n\n<p>If the proportion of expenditure in a person&#8217;s income is small, then demand for the product is relatively inelastic. For example, newspapers. If the proportion of expenditure is large, then demand for the product is relatively elastic.<\/p>\n\n\n\n<p class=\"has-text-align-center\"><strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" target=\"_blank\" rel=\"noreferrer noopener\">Solution of other subjects<\/a><br><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-textbook-solutions\/\">Solution of all Chapters of Economics<br><\/a> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" target=\"_blank\" rel=\"noreferrer noopener\">1<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\">2<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" target=\"_blank\" rel=\"noreferrer noopener\">3A<\/a> &#8211; <strong><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\">3B<\/a> &#8211;<\/strong> <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" target=\"_blank\" rel=\"noreferrer noopener\">4<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">5<\/a><\/strong> <strong>&#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">6<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">7<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">8<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">9<\/a> &#8211; <a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" data-type=\"URL\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" target=\"_blank\" rel=\"noreferrer noopener\">10<\/a><\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Q7_Observe_the_following_figure_and_answer_the_questions\"><\/span>Q.7. Observe the following figure and answer the questions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">1) Identify and define the degrees of elasticity of demand from the following demand curves.<\/span><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"440\" height=\"437\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Q7-A.png\" alt=\"Degree of Elasticity of demand\" class=\"wp-image-6099 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Q7-A.png 440w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Q7-A-300x298.png 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Q7-A-150x150.png 150w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Q7-A-80x80.png 80w\" data-sizes=\"(max-width: 440px) 100vw, 440px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 440px; --smush-placeholder-aspect-ratio: 440\/437;\" \/><\/figure>\n\n\n\n<p>a) Perfectly Inelastic Demand: When a percentage change in price has no effect on the quantity demanded of a commodity it is called perfectly inelastic demand.<\/p>\n\n\n\n<p>b) Perfectly Elastic Demand: When a slight or zero change in the price brings about an infinite change in the quantity demanded of that commodity, it is called perfectly elastic demand.<\/p>\n\n\n\n<p>c) Unitary elastic demand: When a percentage change in price leads to a proportionate change in quantity demanded then demand is said to be unitary elastic.<\/p>\n\n\n\n<p>d) Relatively elastic demand: When a percentage change in price leads to more than proportionate change in quantity demanded, the demand is said to be relatively elastic.<\/p>\n\n\n\n<p><strong><span class=\"has-inline-color has-vivid-purple-color\">2) In the following diagram AE is the linear demand curve of a commodity. On the basis of the given diagram state whether the following statements are True or False. Give reasons to your answer.<\/span><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"253\" height=\"245\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2021\/09\/Q7-b.png\" alt=\"linear demand curve\" class=\"wp-image-6103 lazyload\" title=\"\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 253px; --smush-placeholder-aspect-ratio: 253\/245;\"><\/figure>\n\n\n\n<p>1) Demand at point \u2018C\u2019 is relatively elastic demand.<strong><br>Answer:<\/strong> False<br><strong>Reason:<\/strong> On the demand curve AE, the distance of CE is less than that of CA. Thus, point &#8216;C&#8217; is close to X-axis. therefore, the demand at point &#8216;C&#8217; is realtively inelastic.<\/p>\n\n\n\n<p>2) Demand at point \u2018B\u2019 is unitary elastic demand.<br><strong>Answer:<\/strong> False<br><strong>Reason:<\/strong> On the demand curve AE, the distance of BE is greater than that of BA. Thus, point &#8216;B&#8217; is close to Y-axis. therefore, the demand at point &#8216;B&#8217; is realtively elastic.<\/p>\n\n\n\n<p>3) Demand at point \u2018D\u2019 is perfectly inelastic demand.<br><strong>Answer:<\/strong> False<br><strong>Reason:<\/strong> On the demand curve AE, the distance of DE is equal to that of DA. Thus, point &#8216;D&#8217; is at same distance from both axis. therefore, the demand at point &#8216;D&#8217; is unitary elastic.<\/p>\n\n\n\n<p>4) Demand at point \u2018A\u2019 is perfectly elastic demand.<br><strong>Answer:<\/strong> True<br><strong>Reason:<\/strong> On the demand curve AE, at point &#8216;A&#8217; the lower segment of the demand curve is AE and there is no upper segment.  therefore, the demand at point &#8216;A&#8217; is Perfectly elastic.<\/p>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center has-cyan-bluish-gray-background-color has-background\"><span class=\"ez-toc-section\" id=\"Extra_Questions\"><\/span>Extra Questions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h4 class=\"wp-block-heading has-light-green-cyan-background-color has-background\"><span class=\"ez-toc-section\" id=\"Distinguish_Between\"><\/span><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Distinguish Between:<\/mark><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><mark style=\"background-color: rgba(0, 0, 0, 0);\" class=\"has-inline-color has-vivid-purple-color\"><b>1) Income Elasticity of Demand and <\/b><span style=\"font-weight: 600;\">Cro<\/span><\/mark><strong><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\">ss <\/mark><\/strong><\/strong><mark style=\"background-color: rgba(0, 0, 0, 0);\" class=\"has-inline-color has-vivid-purple-color\"><b>Elasticity of Demand.<\/b><\/mark><\/mark><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-fixed-layout\"><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong><b><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Income Elasticity of Demand<\/mark><\/b><\/strong><\/td><td class=\"has-text-align-center\" data-align=\"center\"><strong><span style=\"font-weight: 600;\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Cro<\/mark><\/span><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\"><strong>ss <\/strong><\/mark><\/strong><b><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-black-color\">Elasticity of Demand<\/mark><\/b><\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">It refers to the degree&nbsp;of responsiveness of a change in quantity&nbsp;demanded to a change in the income only, other factors including price remain unchanged.<\/td><td class=\"has-text-align-center\" data-align=\"center\">It refers to a change in&nbsp;quantity demanded of one commodity due&nbsp;to a change in the price of other commodities.(Complementary goods or substitutes)<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">Ey = %&nbsp;Change in quantity demanded Q \/ <br>%&nbsp;Change in income of a consumer Y<br><\/td><td class=\"has-text-align-center\" data-align=\"center\">Ec = Percentage change in Qty. demanded of A\/Percentage change in Price of B<br>(A = Original commodity, B = Other commodity)<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h4 class=\"wp-block-heading has-light-green-cyan-background-color has-background\"><span class=\"ez-toc-section\" id=\"Answer_the_following_questions\"><\/span>Answer the following questions:<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p><mark style=\"background-color: rgba(0, 0, 0, 0);\" class=\"has-inline-color has-vivid-purple-color\"><b>1) Explain the <\/b><span style=\"font-weight: 600;\">types<\/span><\/mark><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"> of Elasticity of Demand<\/mark><\/strong><mark style=\"background-color: rgba(0, 0, 0, 0);\" class=\"has-inline-color has-vivid-purple-color\"><b>.<\/b><\/mark><\/p>\n\n\n\n<p><\/p>\n\n\n\n<p><mark style=\"background-color: rgba(0, 0, 0, 0);\" class=\"has-inline-color has-vivid-purple-color\"><b>2) What are <\/b><span style=\"font-weight: 600;\">the<\/span><\/mark><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"> types of price elasticity of demand?<\/mark><\/strong><\/p>\n\n\n\n<p><strong>Answer:<\/strong><br><strong>Price elasticity:<\/strong> According to Prof. Alfred Marshall, price elasticity of demand is a ratio of proportionate change in the quantity demanded of a commodity to a given proportionate change in its price only.<\/p>\n\n\n\n<p>Ed = Percentage change in Quantity Demanded\/Percentage change in Price<\/p>\n\n\n\n<p>Symbolically, <br>Ed = %\u2206Q \/ %\u2206P ,<br>Ed = \u2206Q\/Q \u00f7 \u2206P\/P<br>Ed = \u2206Q\/Q \u00d7 P\/\u2206P<br>Where,<br>Q = Original quantity demanded<br>\u2206Q = Difference between the new quantity and original quantity demanded<br>P = Original price<br>\u2206P = Difference between new price and original price<\/p>\n\n\n\n<p><strong>Following are the types of Price Elasticity of Demand:<\/strong><\/p>\n\n\n\n<p><strong>1) Perfectly Elastic Demand (Ed = \u221e) :<br><\/strong>When a slight or zero change in the price brings about an infinite change in the quantity demanded of that commodity, it is called perfectly elastic demand. It is only a theoretical concept. For example, a 10% fall in price may lead to an infinite rise in demand.<\/p>\n\n\n\n<p>Ed = Percentage change in Quantity Demanded \/ Percentage change in Price = \u221e<br>Ed = \u221e<\/p>\n\n\n\n<figure class=\"wp-block-image size-medium\"><img decoding=\"async\" width=\"300\" height=\"252\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Perfectly-Elastic-Demand-300x252.webp\" alt=\"Perfectly Elastic demand\" class=\"wp-image-32545 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Perfectly-Elastic-Demand-300x252.webp 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Perfectly-Elastic-Demand.webp 616w\" data-sizes=\"(max-width: 300px) 100vw, 300px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 300px; --smush-placeholder-aspect-ratio: 300\/252;\" \/><\/figure>\n\n\n\n<p>In the above figure, the demand curve DD is a horizontal line parallel to the X-axis indicating perfectly elastic demand.<\/p>\n\n\n\n<p><strong>2) Perfectly inelastic demand (Ed = 0) :<br><\/strong>When a percentage change in price has no effect on the quantity demanded of a commodity it is called perfectly inelastic demand. For example, a 20% fall in price will have no effect on the quantity demanded.<\/p>\n\n\n\n<p>Ed = %\u2206Q \/ %\u2206P<br>Ed = 0\/20 = 0<br>Ed = 0<br>In practice, such a situation rarely occurs. For example, demand for salt, and milk.<\/p>\n\n\n\n<figure class=\"wp-block-image size-medium\"><img decoding=\"async\" width=\"300\" height=\"268\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Perfectly-inelastic-demand-300x268.webp\" alt=\"Perfectly inelastic demand\" class=\"wp-image-32561 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Perfectly-inelastic-demand-300x268.webp 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Perfectly-inelastic-demand.webp 580w\" data-sizes=\"(max-width: 300px) 100vw, 300px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 300px; --smush-placeholder-aspect-ratio: 300\/268;\" \/><\/figure>\n\n\n\n<p>In the above figure, when price rises from OP to OP<sub>1<\/sub> or when the price falls from OP to OP<sub>2<\/sub>, demand remains unchanged at OQ. Therefore, the demand curve is a vertical straight line parallel to the Y axis, indicating perfectly inelastic demand.<\/p>\n\n\n\n<p><strong>3) Unitary elastic demand (Ed = 1) :<br><\/strong>When a percentage change in price leads to a proportionate change in quantity demanded then demand is said to be unitary elastic. For example, 50% fall in price of a commodity leads to 50% rise in quantity demanded.<\/p>\n\n\n\n<p>Ed = %\u2206Q \/ %\u2206P <br>Ed = 50\/50 = 1 <br>\u2234 Ed = 1<\/p>\n\n\n\n<figure class=\"wp-block-image size-medium\"><img decoding=\"async\" width=\"300\" height=\"277\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Unitary-elastic-demand-300x277.webp\" alt=\"Unitary elastic demand\" class=\"wp-image-32575 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Unitary-elastic-demand-300x277.webp 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Unitary-elastic-demand.webp 504w\" data-sizes=\"(max-width: 300px) 100vw, 300px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 300px; --smush-placeholder-aspect-ratio: 300\/277;\" \/><\/figure>\n\n\n\n<p>In the above figure, when price falls from OP to OP<sub>1<\/sub> (50%), demand rises from OQ to OQ<sub>1<\/sub> (50%). Therefore, the slope of the demand curve is a &#8216;rectangular hyperbola&#8217;.<\/p>\n\n\n\n<p><strong>4) Relatively elastic demand (Ed &gt;1) :<br><\/strong>When a percentage change in price leads to more than proportionate change in quantity demanded, the demand is said to be relatively elastic. For example, 50% fall in price leads to 100% rise in quantity demanded.<\/p>\n\n\n\n<p>Ed = %Q \/ %P<br>Ed = 100\/50 <br>\u2234Ed = 2<br>Ed &gt; 1<\/p>\n\n\n\n<figure class=\"wp-block-image size-medium\"><img decoding=\"async\" width=\"300\" height=\"248\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Relatively-elastic-demand-300x248.webp\" alt=\"Relatively elastic demand\" class=\"wp-image-32584 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Relatively-elastic-demand-300x248.webp 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Relatively-elastic-demand.webp 510w\" data-sizes=\"(max-width: 300px) 100vw, 300px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 300px; --smush-placeholder-aspect-ratio: 300\/248;\" \/><\/figure>\n\n\n\n<p>In the above figure, when price falls from OP to OP<sub>1<\/sub> (50%), demand rises from OQ to OQ<sub>1<\/sub> (100%). Therefore, the demand curve has a flatter slope.<\/p>\n\n\n\n<p><strong>5) Relatively inelastic demand (Ed &lt; 1) :<br><\/strong>When a percentage change in price leads to less than proportionate change in the quantity demanded, demand is said to be relatively inelastic. For example, 50% fall in price leads to 25% rise in quantity demanded.<\/p>\n\n\n\n<p>Ed = %\u2206Q \/ %\u2206P = 25\/50 = 0.5<br>Ed = 0.5 <br>\u2234Ed &lt; 1<\/p>\n\n\n\n<figure class=\"wp-block-image size-medium\"><img decoding=\"async\" width=\"300\" height=\"260\" data-src=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Screenshot-2024-08-29-at-6.53.59\u202fPM-300x260.webp\" alt=\"Relatively inelastic demand\" class=\"wp-image-32593 lazyload\" title=\"\" data-srcset=\"https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Screenshot-2024-08-29-at-6.53.59\u202fPM-300x260.webp 300w, https:\/\/scholarsclasses.com\/blog\/wp-content\/uploads\/2024\/07\/Screenshot-2024-08-29-at-6.53.59\u202fPM.webp 542w\" data-sizes=\"(max-width: 300px) 100vw, 300px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 300px; --smush-placeholder-aspect-ratio: 300\/260;\" \/><\/figure>\n\n\n\n<p>In the above figure, when price falls from OP to OP<sub>1<\/sub> (50%), demand rises from OQ to OQ<sub>1<\/sub> (25%). Therefore, the demand curve has a steeper slope.<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><mark style=\"background-color:rgba(0, 0, 0, 0)\" class=\"has-inline-color has-vivid-purple-color\"><strong>3) Explain the Ratio or Percentage method of measuring elasticity of demand.<\/strong><\/mark><\/mark><\/strong><\/p>\n\n\n\n<p><strong>Ratio or Percentage method:<\/strong><\/p>\n\n\n\n<p>The ratio method was developed by Prof. Marshall. According to this method, the elasticity of demand is measured by dividing the percentage change in demand by the percentage change in price. The percentage method is also known as the Arithmetic method. Price elasticity is measured as :<\/p>\n\n\n\n<p>Ed = Percentage change in Quantity demanded \/ Percentage change in Price<\/p>\n\n\n\n<p>Symbolically:<br>Ed=\u25b3Q\u200b\/Q \u00f7\u25b3P\/P \u200b<br>=\u25b3Q\/Q \u200b\u00d7 P\/\u25b3P\u200b<\/p>\n\n\n\n<p>\u25b3Q &nbsp;= Difference between the new quantity and original quantity demanded.<br>\u25b3P =&nbsp;Difference between the new price and original&nbsp;price<br>Q =&nbsp;Original quantity demanded<br>P =&nbsp;Original price<\/p>\n\n\n\n<p><strong>Numerical example:<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\">Price (Rs)<\/td><td class=\"has-text-align-center\" data-align=\"center\">Qty. Demanded<br>(in Kg)<\/td><td class=\"has-text-align-center\" data-align=\"center\">Formula<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">20<\/td><td class=\"has-text-align-center\" data-align=\"center\">10<\/td><td class=\"has-text-align-center\" data-align=\"center\">Ed=\u25b3Q\/Q \u200b\u00d7 P\/\u25b3P\u200b<\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\">25<\/td><td class=\"has-text-align-center\" data-align=\"center\">09<\/td><td class=\"has-text-align-center\" data-align=\"center\"><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p>Original Price, P = 20, New price P = 25<\/p>\n\n\n\n<p>\u25b3P = 5 (Difference between new and original price)<br>Original Quantity Demanded, Q = 10, New demand = 9<br>\u25b3Q = 1 (Difference between new and original quantity demanded)<\/p>\n\n\n\n<p>Ed = \u25b3Q\/Q \u200b\u00d7 P\/\u25b3P\u200b<br>Ed = 1\/10 \u00d7 20\/5<br>Ed = 0.4<br>Ed &lt; 1<\/p>\n\n\n\n<p>It means the elasticity of demand is relatively inelastic.<\/p>\n\n\n\n<p><mark style=\"background-color: rgba(0, 0, 0, 0);\" class=\"has-inline-color has-vivid-purple-color\"><mark style=\"background-color: rgba(0, 0, 0, 0);\" class=\"has-inline-color has-vivid-purple-color\"><mark style=\"background-color: rgba(0, 0, 0, 0);\" class=\"has-inline-color has-vivid-purple-color\"><span><b>4) Explain the <\/b><span style=\"font-weight: 600;\">Point<\/span><b> or Geometric method of measuring elasticity of demand.<\/b><\/span><\/mark><\/mark><\/mark><\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><strong>Chapter Name <\/strong><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-economics-chapter-1\/\">1) Introduction to Micro and Macro Economics<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-2\/\">2) Utility Analysis<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3a\/\">3A) Demand Analysis<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-3b\/\">3B) Elasticity of Demand<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-4-exercise\/\">4) Supply Analysis<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-5-solutions\/\">5) Forms of Market<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-6-solutions\/\">6) Index Numbers<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-7-solutions\/\">7) National Income<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-8-solutions\/\">8) Public Finance in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-9-solutions\/\">9) Money Market and Capital Market in India<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-economics-chapter-10-solutions\/\">10) Foreign Trade of India<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading has-text-align-center\"><span class=\"ez-toc-section\" id=\"Check_out_other_posts_related_to_the_12th_Commerce\"><\/span>Check out other posts related to the 12th Commerce<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/www.youtube.com\/@Scholarszilla\" data-type=\"link\" data-id=\"https:\/\/www.youtube.com\/@Scholarszilla\" target=\"_blank\" rel=\"noopener\">12th Commerce Video Lectures<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-notes\/\">Textbook Solutions of 12th Commerce (All Subjects)<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/ebalbharti-12th-books-pdf\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/ebalbharti-12th-books-pdf\/\"> Free PDF of 12th Commerce Textbooks <\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/hsc-it-online-exam\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/hsc-it-online-exam\/\">12th Commerce IT MCQ Preparation (Online Test)<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/new-paper-pattern-of-12th-commerce\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/new-paper-pattern-of-12th-commerce\/\"> Free PDF of 12th Commerce Textbooks <\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/sample-question-paper-for-12th-commerce\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/sample-question-paper-for-12th-commerce\/\">Sample Paper of 12th Commerce for Practice PDF<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-navneet-practice-papers-pdf\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/12th-commerce-navneet-practice-papers-pdf\/\">PDF of Solved Sample papers of 12th Commerce to improve Paper Presentation<\/a><\/td><\/tr><tr><td class=\"has-text-align-center\" data-align=\"center\"><a href=\"https:\/\/scholarsclasses.com\/blog\/hsc-previous-year-question-paper\/\" data-type=\"link\" data-id=\"https:\/\/scholarsclasses.com\/blog\/hsc-previous-year-question-paper\/\">Old Question Papers of 12th Commerce with solution (All Subjects)<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":18882,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[5],"tags":[2457],"class_list":["post-5994","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-hsc-maharashtra-board","tag-12th-economics-chapter-3b"],"_links":{"self":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/5994","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/comments?post=5994"}],"version-history":[{"count":25,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/5994\/revisions"}],"predecessor-version":[{"id":39311,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/posts\/5994\/revisions\/39311"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media\/18882"}],"wp:attachment":[{"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/media?parent=5994"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/categories?post=5994"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/scholarsclasses.com\/blog\/wp-json\/wp\/v2\/tags?post=5994"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}