Increase

Table
H1 H2 H3 H4 H5
Salt 0 0 0 0 0
Choc 0.833333333 1 0 1 0
Gold 5 5 5 2 0

Decrease
table
H1 H2 H3 H4 H5
Salt 0 0 0 0 0
Choc 0 1 0 0.5 0
Gold 7.5 5 10 2 0
Factors Price Demand Supply
Price - Inverse relationship Direct Relation, since
(more variation in if the price of the
elastic goods than product is expands,
inelastic), because as the producer would
the price expands want to expand the
people would be supply for a magnified
willing to purchase it profit margin
Demand More demand exists - Producers attempt to
only when the prices keep Supply and
are contracted – demand equal.
Inverse Relation
Supply If there is more supply Producers attempt to -
of a product, they keep Supply and
would want to demand equal.
increase its price so
that profits can
increases substantially
– Direct Relation
Factor
High competition also makes products more
elastic, like
Other products like water, electricity are basic
amenities and so are inelastic. However since
there are many uses of them, if prices do
change, the usage of the product will
increase/decrease by altering the use-cases of
the product.
Also, the high income band of consumers will
not be much affected by changes in prices,
hence any product will be more inelastic to
high-income than low-income groups.
Urgent goods will become more inelastic in
nature
Price range of the product affects the elasticity.
Higher the price, more the elasticity.
Appendix
Example
If salt (an inelastic good) from Tata increases its
prices, people would prefer other salt
manufacturers.
If electricity prices increase, people will stop
using the AC/geyser too much. Therefore
products with more uses have more elasticity.
Increase In price of milk will be substantial for a
person who can hardly afford enough. For a rich
man, though, this change is trivial.
Life-saving medicines that are urgent are
inelastic
(20% increase of Rs.10 chocolate = Rs.12 - >
Rs.2 difference;
20% increase of Rs.10 lakh car = Rs.12 lakh -> 2
lakh difference)
Questionnaire
Questionnaire
Greetings. This questionnaire is created to calculate the influence of the price of product on the
consumption of that product by households. As you will observe, some products are different than
others: the consumption of some may change radically with price, but some may not change at all.
The under-lying economic concept of this observation is ‘Price Elasticity of Demand’. If the price
elasticity of demand is high, small changes in price will result in large changes in the quantity
demanded and vice-versa.

Please fill the tables below:

Name of Product: Salt

Price (P in Rs.) Quantity Demanded (Q in units)

Current Price
Increased by 20%
Decreased by 20%

Select 1 Product from Category 2 and fill the table below:

Name of Product: Chocolates

Price (P in Rs.) Quantity Demanded (Q in units)

Current Price
Increased by 20%
Decreased by 20%

Select 1 Product from Category 3 and fill the table below:

Name of Product: Gold

Price (P in Rs.) Quantity Demanded (Q in units)

Current Price
Increased by 20%
Decreased by 20%

Thank you for your cooperation.