Total outlay method

Total outlay method:

We can measure elasticity via a change in expenses on commodities due to a variation in price.

A) Demand is elastic, when net outlay or expenditure rises for a fall in price (i.e., ep > 1).

B) Demand is inelastic, when net outlay or expenditure downs for a fall in price (i.e., ep < 1).

C) Elasticity of demand is unitary, when net expenditure does not modify for a drop in price (i.e., ep = 1).

The outcomes are tabulated in table shown below:

2475_total outlay method.jpg

 

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