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Elasticity of Demand

ICSE · Class 12 · Economics

Quick revision notes for Elasticity of Demand — ICSE Class 12 Economics. Key concepts, formulas, and definitions for last-minute revision.

62 questions36 flashcards5 concepts

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Key Topics to Revise

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1. Degrees of Price Elasticity of Demand

  • Price elasticity of demand differs from commodity to commodity and from person to person.
  • There are five kinds or degrees of price elasticity of demand.
  • The absolute value of the elasticity coefficient ranges from zero to infinity.
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2. Methods of Measuring Price Elasticity of Demand

  • There are four important methods of measuring price elasticity of demand: percentage method, total expenditure method, geometrical or point method, and arc method.
  • Percentage method is also called proportionate method or mathematical method.
  • Proportionate method is obtained from the percentage method by cancelling 100 from numerator and denominator.
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3. Total Expenditure Method and Comparison of Elasticity

  • Total expenditure is price multiplied by quantity purchased.
  • If price falls and total expenditure rises, demand is elastic.
  • If price rises and total expenditure falls, demand is elastic.
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4. Income Elasticity of Demand

  • Income elasticity of demand measures responsiveness of demand to a change in consumer income, other determinants remaining constant.
  • According to Watson, income elasticity of demand means the ratio of the percentage change in quantity demanded to the percentage change in income.
  • Positive income elasticity is found in normal goods.

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Full Notes

Key Concepts

Price elasticity of demand showsWhen quantity demanded does not changeWhen a large change in priceWhen percentage change in demandWhen percentage change in demand

Frequently Asked Questions

What are the important topics in Elasticity of Demand for ICSE Class 12 Economics?
Key topics in Elasticity of Demand include Types and Degrees of Elasticity of Demand — Complete Overview, Total Expenditure Method — Correct Decision Rules, Elasticity of Demand - Full Chapter Concept Map. These are the concepts ICSE Class 12 examiners draw on most — study them first, then practise related questions.
How to score full marks in Elasticity of Demand — ICSE Class 12 Economics?
Understand the core concepts first, then work through the 62 practice questions available for this chapter. Revise formulas and definitions regularly, and use flashcards for quick recall before the exam.

Sources & Official References

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