Elasticity in general, means the sensitivity or responsiveness of one variable to any change in another related variable. Demand Elasticity is a concept of judging the responsiveness of demand.
J.S. Mill and Cournot were the early economists who referred to Elasticity of Demand in Economics. But this concept was actually developed by Dr. Marshall in his famous book “Principles of Economics”. Prof. Marshall introduced the concept of elasticity of demand to measure the change in demand. Thus it is the measurement of the change in demand in response to a given change in the price of a commodity. It measures how much demand will change in response to a certain increase or decrease in the price of a commodity.
The elasticity of demand measures the responsiveness of the quantity demanded of a good, to change in its price. Price of other goods and changes in consumer’s income.
Elasticity of demand is a measure of the responsiveness of quantity demanded to a change in price.
– K Estham
The elasticity of demand at any price or at any output is the proportional change of amount purchased in response to a small change in price divided by the proportional change in price.
Elasticity of demand is the capacity of demand to change with least change in price.
-S. K . Rudra
The elasticity of demand for a commodity is the rate at which the quantity bought changes as the price changes.
Types of Elasticity of Demand
The concept of elasticity of demand can be classified with the respect to a change in its determinants, like own price, prices of substitutes or complementary commodities and income of the consumer. The concepts of demand elasticities used in business decisions are :
- Price elasticity
- Cross elasticity
- Income elasticity
- Advertisement elasticity
- Elasticity of price expectation