Elasticity of Demand , Importance / use of Elasticity of Demand

             Elasticity of Demand 

The effect of change of a price on the quantity demanded is called as the elasticity of demand . 

         Mathematicaly elasticity of demand given as :- 

                 Importance of 

              Elasticity of Demand

1- Elasticity of demand helps in understanding the price determination by the monopolist . 

2- Elasticity of demand helps to government in its taxation policies . 

3- Elasticity of demand helps for shifting of tax werdon . 

4- Elasticity of demand helps in the determination of wages . 

5- Elasticity of demand helps in understanding other types of prices , such as exchange rates .