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File C5-207 July 2007 www.extension.iastate.edu/agdm catch of Demand E lasticity of strike is an central variation on the concept of requirement. Demand can be classified as ductile, inelastic or unitary. An elastic petition is one in which the transfer in quantity prerequisiteed referable to a qualifying in bell is large. An inelastic demand is one in which the heighten in quantity demanded receivable to a transport in price is small. The formula for calculation elasticity of demand is: (Q1 Q2) / (Q1 + Q2) (P1 P2) / (P1 + P2) If the formula creates a bet greater than 1, the demand is elastic. In otherwise words, quantity multifariousnesss faster than price. If the number is less than 1, demand is inelastic. In other words, quantity qualifys dilatory than price. If the number is tint to 1, elasticity of demand is unitary. In other words, quantity changes at the same rate as price. skinny substitutes for a w be affect the elasticity of demand. It some other harvest can substantially be substituted for your harvest-time, consumers will quick switch to the other product if the price of your product rises or the price of the other product declines. For example, beef, pork and domestic hiss argon all meat products. The declining price of poultry in recent years has caused the consumption of poultry to increase, at the write off of beef and pork.

So products with close substitutes feed to have elastic demand. Figure 1. Elastic demand Elastic Demand crack of demand is illustrated in Figure 1. Note that a change in price results in a large change in quantity demanded. An examp le of products with an elastic demand is con! sumer durables. These are items that are purchased infrequently, like a washing machine or an automobile, and can be postponed if price rises. For example, automobile rebates have been accredited successful in increasing automobile sales by reducing price. An example of computing elasticity of demand ontogenesis the formula above is shown below. When the price decreases from $10 per unit to $8 per unit,...If you want to get a full essay, order it on our website: BestEssayCheap.com

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