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A price ceiling can be defined as the price that has been set by the government below the equilibrium price and cannot be soared up above that. A price floor is said to exist when the price is set above the equilibrium price and is not allowed to fall.
According to Prof. Thomas, “The supply of a commodity is said to be elastic when as a result of a change in price, the supply changes sufficiently as a quick response. Contrarily, if there is no change or negligible change in supply or supply pays no response, it is elastic.”
The cross elasticity of demand can be defined as a measure of a proportionate change in the demand for goods as a result of a change in the price of related goods.
An increase in the income of consumers increases the demand for the product even if the price remains constant. The responsiveness of quantity demanded with respect to the income of consumers is called the income elasticity of demand.
The concept of price elasticity of demand plays an important role in the functioning economies by having a significant contribution in the field of industry, trade, and commerce.
The price elasticity of demand of a product reflects the change in the quantity demanded as a result of a change in price.
The extent of responsiveness of demand with change in the price does not remain the same under every situation. The demand for a product can be elastic or inelastic, depending on the rate of change in the demand with respect to change in price of a product.
Price elasticity of demand is a measure of a change in the quantity demanded of a product due to change in the price of the product in the market. It can also be defined as the ratio of the percentage change in quantity demanded to the percentage change in price.