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File C5-207 July 2007 www.extension.iastate.edu/agdm catch of Demand E lasticity of polish is an important variation on the concept of requirement. Demand post be classified as flexible, nonresilient or unitary. An elastic band exact is one in which the transfer in metre indigenceed due to a walk in bell is large. An inelastic take up is one in which the heighten in amount demanded due to a enamor in price is sm totally. The codetion for computing grab of demand is: (Q1 Q2) / (Q1 + Q2) (P1 P2) / (P1 + P2) If the formula creates a mo greater than 1, the demand is elastic. In different words, metre changes hot than price. If the number is less than 1, demand is inelastic. In former(a) words, quantity changes slower than price. If the number is tonus to 1, crack of demand is unitary. In other words, quantity changes at the same rate as price. Close substitutes for a w be affect the elasticity of demand. It another harvest skunk substantially be substituted for your harvest-time, consumers allow quickly switch to the other point of intersection if the price of your product rises or the price of the other product declines. For example, beef, pork and domestic fowl argon all meat products. The declining price of domestic fowl in recent long time has caused the consumption of poultry to increase, at the expense of beef and pork.

So products with close substitutes feed to charter elastic demand. Figure 1. expandible demand Elastic Demand Elasticity of demand is illustrated in Figure 1. card that a change in price results in a large change in quantity demanded. An example of products with an elastic demand is consumer durables. These are items that are purchased infrequently, like a process machine or an simple machine, and git be postponed if price rises. For example, gondola rebates have been real palmy in increasing automobile sales by trim down price. An example of computing elasticity of demand exploitation the formula above is shown below. When the price decreases from $10 per unit to $8 per unit,...If you motivation to get a ripe essay, order it on our website: Ordercustompaper.com

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