Before understanding the difference between Law of Demand vs Elasticity of Demand, both concepts should be clear:
LAW OF DEMAND
Law of demand explains the relationship between price of the commodity and its demand. The law states that there is inverse or negative relationship between the demand and price of the commodity, ceteris paribus i.e. other things being constant. It means if the price of the commodity increases, the demand for commodity decreases and if the price of commodity falls, the demand for commodity increases.
ACCORDING TO MARSHALL
“The law of demand states that amount demanded increases with a fall in price and diminishes with the increase in price”.
ACCORDING TO SAMUELSON
“Law of Demand states that people will buy more at lower prices and buy less at higher prices, ceteris paribus”.
ACCORDING TO BILAS
“The Law of Demand states that other things being equal, the quantity demanded per unit of time will be greater, the lower the price and smaller, the higher the price.”
ELASTICITY OF DEMAND
Elasticity of Demand measures the extent to which quantity demanded of a commodity increases or decreases in response to increase or decrease in its price, the price of related goods or a change in the income of consumer.
ACCORDING TO PROF. DOOLEY
“The elasticity of demand measures the responsiveness of quantity demanded of a good to change in its price, price of other goods and change in consumer’s income.”
Thus, the measure of the proportion of change in demand due to given change in factors affecting demand is known as Elasticity of demand.
LAW OF DEMAND VS ELASTICITY OF DEMAND
Law of Demand vs Elasticity of Demand is as follows:
|BASIS OF DIFFERENCE||LAW OF DEMAND||ELASTICITY OF DEMAND|
|MEANING||Law of Demand states the relationship between price of the commodity and its demand.||Elasticity of demand measures the extent to which quantity demanded of a commodity increases or decreases due to change in the price of good, income or price of related goods.|
|NATURE||Law of demand is a qualitative statement which expresses the change in direction of demand due to change in price of goods.||Elasticity of demand is a quantitative change in demand due to price changes.|
|POSITIVE OR NEGATIVE||In general conditions, law of demand indicates the inverse relationship between price and demand.||Elasticity of demand may be positive or negative.|
|TYPES||There is no type of law of demand.||The elasticity of demand may be: Price elasticity of demand Income elasticity of demand Cross elasticity of demand|
|DEGREES||There are no degrees of law of demand.||The elasticity of demand has five degrees: Infinite demand More than one elasticity Unitary elastic Less than one elasticity Zero or inelastic demand|
|EXCEPTIONS||The exceptions of law of demand are: Veblen Goods or Articles of Distinction Ignorance of consumers Giffen Goods etc.||There are no such exceptions of elasticity of demand.|