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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.