Welcome To our

Presentation

Group # 8
Prepared For:

MR. SAMIR KUMAR SHEEL

Associate Professor
Department of Marketing
University of Dhaka
 Group Profile
Sl No NAME Roll
1 Md. Ahidur Rahman 150
2 Md. Abul Kashem 152
3 Md. Zafar Ahmed 154
4 Sayed Parvez 156
5 Md. Enamul Haque 158
6 Tanzila Ahmed 162
7 Frizea Talukder 164
8 Md. Tausif Al Muktadir 166
9 Rumim Ahmed 168
10 Md. Ibrahim Khalil 170
 Topic
a) Elasticity Of Demand
Meaning Of Elasticity
• The term Elasticity expresses the degree of correlation
between demand and Price.
• The elasticity of demand is a measure of the relative
change in account purchased in response to a relative
change in price on a given demand curve.
- Mayer A.L.
• The elasticity of demand, at any price or at any output,
is the proportional change of amount purchased in
response to a small change in price, divided by the
proportional change of price
Mrs. Joan Robinson
 Classification of Elasticity
of Demand
• From the viewpoint of Elasticity
Demand May be two types: -

a. Elastic Demand
b. Inelastic Demand
Elastic Demand

• When the rate of

change in
demand is
greater than the
rate of change in
price is said to
be elastic
Demand
Inelastic Demand

• When the rate of

change in demand
is less than the
rate of change in
price is said to be
Inelastic Demand
Five Cases Of Elasticity
• There are five cases for measuring the
price elasticity of demand. they are:
(a) Elasticity greater than one[ed>1]
(b) Elasticity less than one[ed<1]
(c) Elasticity equals to
one[ed=1]
(d) Perfect elasticity
(e) Imperfect or zero elasticity[ed=0]
Elasticity greater than one
[Ed > 1]:
• If the change in
demand is
greater than the
change in price,
Then it is said to
be elasticity
greater than one
[ed>1]. It is also
called elasticity
of demand
Elasticity less than one
[Ed < 1]:
• If the change in
demand is less
than the change
in price, Then it is
said to be
elasticity less
than one [ed<1].
It is also called
inelasticity of
demand.
Elasticity Equals to one
[Ed = 1]:

• If the rate of change

in demand and the
rate of change in
price are equal,
Then it is said to be
elasticity equals to
one [ed=1]. It is also
called unit elasticity
Perfect Elasticity
• If a little change
in price of a
particular product
causes a severe
effect on the
change in
demand of that
particular
product, then it is
said to be perfect
Elasticity.
Imperfect Elasticity

• If the change in
price of a product
does not have any
impact on the
change in
demand, then it is
said zero (0)
elasticity
Md. Abul Kashem
Roll : - 152
Price Elasticity

Proportion Change in amount Demanded

Price Elasticity = Proportion Change in Price

Change in Demand / Change in Price

=
Amount Price
Income Elasticity
• Income elasticity is a measure of respon-
siveness of potential buyers to change in
income. It represents the ratio of change
in demand of product as with the change
in income of the consumer concerned.

• It is of four types:
1. Positive Income Elasticity of Demand
2. Negative Income Elasticity of Demand
3. zero Income Elasticity of Demand
4. Other types of Income elasticity
Cross Elasticity of Demand
• The relationship between changes in the price
of one commodity and the resulting changes
in the quantity demand of another commodity
is described as the cross elasticity of
demand.

• It has three types: -

1. Positive cross Elasticity of Demand
2. Negative cross Elasticity of Demand
3. Zero cross Elasticity of Demand
Different Type of Goods
• With the concern of elasticity of demand,
we can differentiate goods or products into
four distinct types. They are –
1. NORMAL GOODS
2. INFERIOR GOODS
3. GIFFEN GOODS
4. VEBLEN GOODS
Frijea Talukder
Roll: - 164
Factors determining Elasticity
• Availability of Close Substitutes
• The Importance of a commodity in
Consumer’s Budget
• The number of users of a Commodity
• Complimentarily between goods
• Level of Incomes
• Time for Adjustment
Measurement of Elasticity
• Three methods have been suggested
for the measurement of elasticity:
1. Total Outlay Method.
2. Proportional Method.
3. Geometrical Method.
Total Outlay Method
• According to this method, we compare
the total outlay of the purchase before
and after the variation in price. Elasticity
of demand is expressed in three ways:
• 1. Unity (Unitary Elasticity)
• 2. Greater than Unity
• 3. Less than Unity
Proportional Method
• In this method, we compare the
percentage change in price with the
percentage change in demand. The
elasticity is the ratio of the percentage
change in the quantity demand to the
percentage change in price change.
Geometrical Method
• Point Elasticity:
This method tells us how
measure elasticity of
demand at any point on a
demand curve. Elasticity
is represented by the
fraction distance from D
to a point on the curve
divided by the distance
from the other end to
that point.
Arc Elasticity
• Any two points on a
demand curve make
an Arc. The area
between P and M on
the DD curve in this
figure is an arc which
measures elasticity
over a certain range of
prices and quantities
Md. Ahidur Rahman
Roll: - 150
• Price Elasticity of Demand and
Total Revenue.

• The Gradient (Slope) of The

Demand Curve.

• Shifts in the Demand Curve

 Practical Application of
Elasticity of Demand
• Taxation
• Monopoly Market
• Appraisal
• Economic policies
• International Trade
• Rate of Foreign Exchange
• Increasing Returns
• Output
• Wages
• Poverty in plenty
• Effect on the economy
Tanzila Ahmed
Roll: - 162
 Topic:
b) Government Intervention
In Market refers to
Bangladesh
Price Control
• Price Floor :
Here the govt. sets
the minimum price
above the equilibrium
price and the result
will be a surplus of
production or supply
Reasons of Price Floor

• To Protect the Producer’s Income

• To Create a Surplus

• In the case of Wages

(The Price of Labor)
Price Ceiling

• If the government
imposes price ceiling
then prices will be set
below the equilibrium
price and the result
will be shortage of
supply.
 Tax Imposition By Bangladesh
Government

• Revenue receipt of a government

consists of two parts:
– Tax-revenue
– Non-tax revenue
 Major Heads of Tax Revenue
in Bangladesh
• A. Taxes on Income and Profit
• 1. Income tax-Companies
• 2. Income tax-Other than Companies
• B. Taxes on Property & Capital Transfer
• 1. Estate Duty and Gift Tax
• 2. Wealth Tax
• 3. Narcotics Duty
• 4. Land Revenue
• 5. Stamp duty-non-judicial
• 6. Registration
• C. Taxes on goods and services
• 1. Customs Duties
• 2. Excise Duties
• 3. Value Added Tax (VAT)
• 4. Supplementary Duty (On luxury items VAT)
• 5. Taxes on Vehicles
• 6. Electricity Duties
• 7. Other Taxes and Duties (travel tax, turn over
tax, etc.)
 Major Heads of Non-Tax
Revenue in Bangladesh

• D. Interest, Dividend and Profit

• E. General Administration and Services
• F. Social and Community Service
• G. Economic Services
• H. Agriculture and Allied Services
• I. Transport and Communication
• J. Other non-tax revenue
• K. Capital Revenue
 Government Rejection of
Market Allocation
• This section examines two extreme cases: -

• i) Providing goods and services free at the

point of delivery (e.g. Treatment in National
health service hospitals and education in state
schools)

• ii) Prohibiting the sale of certain goods and

services (e.g. certain drugs, weapons and
pornography)
 Agriculture and Agricultural
Policy
• THE REASONS OF GOVERNMENT INTERVENING:
The following are the most commonly cited
problems of a free market in agricultural
products:
1. AGRICULTURAL PRICES ARE SUBJECT TO
CONSIDERABLE FLUCTUATIONS
2. LOW INCOMES FOR THOSE IN FARMING
3. TRADITIONAL WAYS OF LIFE MAY BE
DESTROYED:
4. COMPETITION FROM ABROAD
 Types of Government
Intervention
• There are five main types of government
intervention in agriculture. They are –
• 1. BUFFER STOCKS
• 2. SUBSIDIES
• 3. HIGH MINIMUM PRICES
• 4. REDUCTIONS IN SUPPLY
• 5. STRUCTURAL POLICIES
 Subsidies in Agriculture from
Bangladesh Government

• Bangladesh government also pays subsidy. In

the financial year 2005-06, government gives
Tk. 12 billion subsidies in agricultural sector.
• Rate of Subsidies:
Sector Rate
Import fertilizer 25%
Rural electrification used for irrigation 20%
Exporting Agro-based industries 30%
Electricity used in agro-based industry 20%
Thank You All