Now give me the time and I'll be blowing your mind, guess I'm another lyricist, I was a cynical child The innocence of heaven and the rich, you never really noticed that my flow was fucking ridiculous Picking a pitiful, never subliminal, seminal, cynical, but I say you're my goddamn master Call me nigga, really, I can feel I'm on a level that most of these other niggas never really got close to I hope you notice me, I spit it focusedly, this is my passion, devoted I can't quit, I came in and conquered by constantly practicing Passing these peons, they pleaded for peace, I'm a beast Hello, hello, hello, good evening everybody, my name is Shubham Jagdish and welcome back to the channel So we have done the first part of Elasticity of Demand for you up Now it's time to complete part 2. In the last video, we taught you the topic of measurement. If you haven't seen it, you can click on the i button or you can go to the playlist. Today we will talk about the next method and first of all we are going to mention the method on which it is necessary to come to the case study.
It will come, it will not come numerical, but the case study will definitely come on it. But case study will definitely come on this. And let's start on that method which is called expenditure method.
But before I begin, I want to tell you that all the notes I am writing on my screen, if you want to download those notes, which is free for everybody, you have to come to my application and download from the free study material section there. And meanwhile, if you want to do live preparation with me, then our Spartans batch 2 is going to start from July 1st. You can enroll in this course. You will get the link in the description.
And in this particular course, you will be delivered some excellent study material. In which you will get the video solution of all the questions of accountancy. And in economics and commerce, you will get my handwritten notes. It is a wonderful thing. And if you want to prepare for entrance examinations along with the board.
Then Fateh is the supreme course for you. In which you can enroll. Let's move towards that method Which is called Expenditure Method Many students, pay attention to this You will enjoy it, you will be waiting for this question in the paper Like Raj Simran was waiting for this Let's see What does Total Expenditure Method say?
There are two cases of Total Expenditure Method We will tell you both the cases with questions But you will not be asked questions From the numerical point of view in examination In Expenditure Method First case, I have written it for you. What is the first case saying? First case, Bacha Party is saying that whenever there is fall in price, whenever price falls and there is no problem in total expenditure, that means no changes are made, then elasticity is equal to 1. Now you will ask me, sir, how do you get this expenditure?
Price into quantity is equal to total expenditure. Do you understand? And if the price falls, total expenditure also falls, then it is said that your elasticity is less than 1. And if the price falls, total expenditure will increase, then it is said that elasticity is more than 1. And it is reciprocal in case number 2 when there is rise in price.
The condition of constant is same. But this thing is reciprocal. If the price is increasing, and if total expenditure increases then ED will be less than 1 means the velocity will be less than 1 and if total expenditure falls then ED will be less than 1 let's understand this with an example first example, we are going to talk about case number 1 when price will fall when price is falling, let's see the first condition first price was 10 then price became 5 price is falling let's see for example we consumed quantity 50 so how much we spent? 5000, how did we spend this? 10 into 50. Now the price has fallen by 5. Now how much am I consuming?
100. Absolutely. Because of law of demand, demand is increasing. So law of demand is also increasing here.
But how much is the expense still happening? The same as it was happening earlier. This means that the total expenditure is constant due to the fall of price.
So ED will be more than 1. I have told you this here. I have told you this through numerical. See the next case. The second case. The price is falling.
Earlier we used to consume 50 quantity and spend 500. Now with the price of 5 rupees, I started consuming 200 quantity. So now how much is the cost? 1000. Price is falling and expenditure is increasing. ED will be more than 1. Say ED, say EP will be more than 1. See, if expenditure is increasing then EP will be more than 1. I told you this here and also through numerical.
See third case, fantastic case is here. Price was 10 then it became 5. Earlier if we consumed 50 then the expense would have been 500. Now if we consume 80, then the expense is 400. Means the price is falling and the total expenditure is also falling. So EP will be less than 1, which I have clearly told you here.
Now let's see the second case, which is not solved in our textbooks. What is the second case? What will happen when the price increases? Price is increasing. Earlier the price was 5, now the price is 10. Let's understand.
Earlier we used to consume 100 quantity, we used to spend 500. Price has increased, we started consuming less, law of demand is falling. order. But my expense is still equal to that. So what will happen? EP will be equals to 1. I have just made you a table and explained it to you.
That table should come down to your heart. Okay, man. Let's move on.
Second case, look. Price is increasing. But if total expenditure also increases, then ED will be less than 1. And what will happen? If price is increasing and total expenditure decreases, then ED will be...
More than one. This is what I have told you through this schedule. Keep this in your mind. In the paper, as a case study, this year also it was asked in 2025. And next year also, in 2026 also this question will be asked. Come on, beta party.
Now we will move on to the next topic. And the next topic is, my dear. What?
The next topic is our point method, which we also call geometric method. Now there is a formula of geometric method. First we will do case number 1 of geometric method.
And before that write the formula. Come on. One second. We will write the formula. The formula of geometric method is lower segment upon upper segment.
What happens? Lower segment upon upper segment. Clear?
In this case number 1 we are doing on a linear demand curve. Straight line demand curve. On a linear demand curve. If any demand curve is a straight line then how will the elasticity be taken out?
Let's make a demand curve. X axis. origin y axis.
See, I made a demand curve. I named it AB. Okay, son?
I took a middle point of this, I named it C. I took a middle point of CB, I named it D. And I took a middle point of AC, I named it E.
Now, see, son, what will happen? If point elasticity, point method says, you remove elasticity on every point. If I If I take out the elasticity at this C point, then how will I take it out?
EP at point C. So, what will be its lower segment? Its lower segment is CB. And what will be its upper segment? AC.
Now, you tell me. If there is one line, it has a middle point, then both parts will be equal. If both parts are equal, then we can write it as equals to 1. Are you understanding?
So, what will be the elasticity at this point? ED or EP is equals to 1. No problem. Okay. How much is the elasticity? 1. Now let's check on point number B.
We are checking EP at point B. What is its lower segment? Nothing.
Means 0. What is its upper segment? AB. 0 upon anything is 0. Means how much is the elasticity at this point?
0. Clear? Clear? Move ahead. Where to solve? Let's solve here.
We solve ED. At point A, at this point. How much will be its lower segment? AB. Its upper segment is nothing, means 0. Anything upon 0 is infinite.
So, at this point, what will happen? At this point, ED is equal to infinite. ED is equal to infinite. Are you understanding? Now, it seems common sense.
What will be above 1? ED will be more than 1. And what will be below 1? ED will be less than 1. Now I am giving you a small work. Here and here you have to derive yourself. Okay?
Will you do this little thing? Let's move ahead. Now let's come to the next case. Now I have told you about linear demand curve.
Now see its case number 2. On a non-linear demand curve. On a non-linear demand curve. If demand curve is not straight line, then what will happen?
Let's see. on a non-linear demand curve. X axis, origin, Y axis.
Assume this is a demand curve and you want to draw an elasticity at this point. So, what you will do is you will draw a tangent from this point. What you will do is you will draw a tangent. Then what will happen? Now, I have drawn it.
Now, what will happen? If we say lower segment, this upper segment, then this here can be 1. So, what we have done now? We have talked about this in detail that if you want to draw point elasticity on linear demand curve, then how will you do it?
And if you want to draw it on non-linear demand curve, then how will you do it? You will have to draw a tangent from the point where you have drawn the elasticity. All the students understood this? Let's do a numerical. Come, let's see.
A small numerical is being presented in front of you. A consumer purchases 20 units of a commodity when its price is 4. Price and quantity demand. When price is 4, then quantity is 20. When price is 4, then quantity is 20. He purchased 30 units of it when its price is 3. When price is 3, then he consumed 30 units. What is the price elasticity of demand for the commodity? How much will be the elasticity of demand?
We know that delta Q upon delta P into P by Q formula. Delta Q is 10. Delta P is 1. Initial P is 4. Initial quantity is 20. Answer will be Elasticity is equal to 2. Means ED will be more than 1. Everyone understood? Now you can solve numerically easily.
Let's move forward. Let's move forward. Let's go. Now we are going to move forward towards our most important topic. Fact.
Factors affecting price elasticity of demand. Here the question is kept as a case study in the paper. Factors affecting price elasticity of demand means.
What are those factors. Because of which either our demand will be affected. Or our demand will not be affected. Effect means either our demand will be elastic. Or not.
Come let's understand all the points one by one. These notes are going to be great for you. Please download.
It is free for everyone. Download the application and pick it up from the free study material. Now let's read the first point.
It is written availability of substitutes. First of all, see what the meaning of availability of substitutes is. Is there any substitute available for any good?
Like you use the Rotomac pen from the market. People use pen. You get pen.
If there are too many substitutes of any good, more and close substitutes. More and close substitutes. In that case, how will the demand be? In that case, our demand is going to be elastic.
The more substitute, the more demand can fluctuate. I said, we are wearing a roto-backup and we are not liking it. Use the cello. If you don't like the cello, use someone else's. Are you understanding or not?
But if there are few and poor substitutes available of any goods, not many substitutes are available, in that case, demand is elastic. That means demand can't be fluctuated. Do you understand this? Let's move on to the next point. The next point is the nature of the commodity.
What kind of commodity are we consuming? Let's see the first one. Necessary commodity. It means that the commodity is necessary to survive.
Like salt, medicine, sugar. So the demand will never fluctuate with that kind of commodity. The demand will always be inelastic.
Sometimes your father will say that no no son, now paracetamol is expensive, now we will not be able to feed you, then we will feed you, when it becomes cheap, then you will be loved by God. It does not happen like this, right? So the demand for the necessary things does not fluctuate and the luxury and comfort things will have a lot of demand.
If you tell your father that you want to buy a pen, you will say, take the money and go and get it. But you tell your father that you want to buy an iPhone. Papa said my shoe has number 9 and when it will fall on your face it will become 6. Tell me do you want this tattoo? So let's move on to the next point. Next point is proportion of income spent.
Means how much of income are you spending on any commodity? Let's assume you earn 1 lakh rupees. And you want a nice Gucci Armani bag. Gucci Armani bag, which will be expensive.
If you buy expensive things, means if you spend a lot of your income, then your demand will be elastic. If there is a large proportion, then your demand will be elastic. If you want to buy a pencil, will you think, a pencil costs Rs. 2, you earn Rs. 1 lakh, will you think? No.
If you are spending less money, if you are spending a smaller proportion on any consumption, then in that case, your demand will be elastic. Inelastic will be, is it the way of eyes, your heart is getting down or not? What is this man, what have these BTS people taught? Moving forward, the number of uses of a commodity The more use of a commodity, the more elastic it is, electricity, there are many uses But what is the main use?
To light the light People are cooking, running fan, running AC, recording online classes And If any product has single use, single doesn't mean lonely like you Sir I am committed I am not talking about that, there is one use If it is single use then its demand will be inelastic Like what? Like Paracetamol When it works? When fever comes Single use, its demand cannot change So if it is single use then its demand will be inelastic Let's come to the next topic and the next topic is time factor How many days you have to consume any item? If you have to consume any item immediately in short period Tomorrow is board exam and today you have to buy stationery So in that case your demand will be inelastic But you are sitting in 12th and you thought that I will wear black suit in my farewell and buy tuxedo So are you going to buy it now?
No You are not going to buy it now so its demand is inelastic The longer you consume, the more demand will be elastic. The faster you consume, the more demand will be inelastic. Let's come to the next point.
Possibility of postponement of consumption. Means, can the consumption of goods be postponed? If goods can be postponed, then demand is elastic. But if goods can't be postponed, then it will be inelastic. You are lying in the hospital, doctor said 4 units of blood will be needed, Papa is saying no no no, it is very expensive sir, when it will be cheap then give it.
So where will they give you, tell me, where will they give you? Next point is, what is our price range? If we are buying something which is very expensive or very cheap, Both of its users are different, their demand will always be inelastic. The same people from South Delhi, South Bombay Who have a lot of money, they don't think how much is the stuff Take it, I will give it to you with credit card, that's the same thing Or it is very cheap, 2 rupees pencil So its demand will be elastic, but the moderate price, middle class, always stay poor People like us, what will be their demand?
It will always be elastic Did you enjoy? Next, habits of consumer Which disease is that? The boy's disease Okay, if any consumer is habitual For some reason, cigarette smokers, they have to smoke, so demand for them never fluctuates, their demand is always inelastic But if you are not habitual to consume any commodity, you are like us, then demand for you will be elastic Now let's come to the income of the consumer, if you are rich, ultra rich, a lot of money, then your demand is always inelastic, you will not even think of buying things But if you are so middle class like me So demand will be elastic Is everyone understanding this? Are you not interested in this topic? Now the chapter is taking its last breath Now we are going to talk about income elasticity What does income elasticity mean?
If there is a change in demand due to change in income, then it will be called income elasticity What can be the formula for this? Percentage change in quantity demand with respect to percentage change in income Oh yes, you told in the previous video that if there is a change in demand due to any determinants then we will call it as that elasticity If there is a fluctuation in demand due to price then we will call it as price elasticity If there is a change in demand due to income then we will call it as income elasticity So what is the formula of income elasticity? Percentage change in quantity demanded with respect to percentage change in income Or delta Q upon delta Y means change in income into Y upon Q Are you understanding this?
This is a topic like price elasticity Now let's come to its types. Now here, you are waiting for the case study like Raj, like Shah Rukh Khan. Now come to types of income elasticity. First is positive. What does positive income elasticity mean?
Increase income, increase demand. Is it clear? We call it positive income elasticity. And this is seen in the case of normal goods. Now there are three cases.
From these three cases, any one case will come. See the first case. The first is income elasticity. Which is called EVI is more than 1. What happens in that case?
Demand is changing more. or Income is changing less Like I am saying My income increased by 20% And my demand increased by 50% We call it Income Elastic Example of this type of case is Luxury Products Okay Second is Income inelastic Means demand is not as much as income increased Income increased by 50% Demand increased by 20% This happens in the case of necessary goods Brother if Earlier I used to earn 10,000 rupees, today I earn 10 crore rupees. Earlier also I used to take one spoon of sugar in tea.
Today also I take one spoon of sugar because what is sugar? Necessary products. So what will be its demand? Income? Inelastic.
Third, unitary elastic. Normal goods case. Means the change in price, sorry, the change in income, the same demand is changing. Income increased by 20%, demand increased by 20%.
Which case? Normal goods case. You will be asked a question What will be the elasticity of the case scenario? What do you understand?
Let's move ahead And comes the second type Which is called negative income elasticity Increase income, decrease demand In which case does this happen? In inferior goods Earlier you didn't have money So you used to buy clothes from the roadside Now you have become rich So you go to the mall You buy clothes from the big showrooms But what happened? Increase income, so the demand for inferior goods Decreases This is called negative Income elasticity Third Zero income elasticity Income increase Or decrease There is no difference On demand This happens In case of Inexpensive necessities Like medicines You are understanding This is salt In case of Inexpensive necessities This happens In case of Income increase Or decrease There is no difference On demand Clear Now let's come to Next topic And so called The last topic Of this particular chapter Which is Cross elasticity I had mentioned about cross elasticity Here because of related goods Elasticity is removed, now let's understand Here a definition is written Percentage change in quantity demanded Of a commodity with respect to percentage change in its price of Related goods Related goods means substitute or complementary Because of change in price of related goods What will be the difference in demand of our goods For example, price of Pepsodent is changing And what is the difference in demand of Colgate?
If we take out the elasticity here, then it will be called cross elasticity. What is the formula? Percentage change in quantity demanded of good X. What is X? This is not your X.
This is good X. Similarly, percentage change in price of good Y. What is this Y?
This is good Y. If the price of good Y is changing, then what will be the difference in demand of X? Here you can write change in quantity of good X divided by change in price of good wine.
into price of good Y upon quantity of good X. Clear? Now come to its types also. Here also case study will come. First, positive cross elasticity.
Understand positive cross elasticity. I am saying that there is a good whose price is increasing. And due to its price increasing, demand of my goods is increasing.
So what kind of goods are we talking about? Pepsodent price is increasing, so demand of Colgate is increasing. Which goods are these?
Substitute goods. Positive cross elasticity is seen in the case of substitute goods Next is negative cross elasticity If the price of something increases and demand decreases Or if the price is low and demand increases It is called negative cross elasticity In the case of complementary goods, the price of petrol increased and the demand of car decreased Which is this example? Negative cross elasticity There is one more thing, zero cross elasticity Zero cross elasticity means unrelated goods Meaning change in price of good X does not affect the demand of good Y If I say that if the price of this book changes, what will be the difference in the demand of this remote? You will say that this is not the question Yes brother, these are unrelated goods And what happens in unrelated goods? Zero cross elasticity elasticity now my heart is at peace and this chapter is over in two parts now you complete this chapter I have taught demand I have taught elasticity of demand download these notes and if you like you can enroll in Spartans for rigorous studies for life classes for doubt solving and for so much and you will get many access you get access to percentage booster then you get sample papers milte hain.
bohot saari cheez hai cheek hai lagta hai koi dikkat hai koi prashani hai toh humari helpline par phone karo 811-260-1234 milte hain bohot chalate ek next video ke saath hain keep smiling and keep learning bye