1. Law of Demand:
   • Statement: All else being equal, as the price of a good or service decreases, the quantity demanded increases, and as the price increases, the quantity demanded decreases.
   • Explanation: This law reflects the inverse relationship between price and quantity demanded. It is based on the assumption that other factors affecting demand (such as income, preferences, and the prices of related goods) remain constant. The law of demand is a fundamental principle in microeconomics.
2. Law of Diminishing Marginal Utility:
   • Statement: As a consumer consumes more units of a good or service, the additional satisfaction (marginal utility) derived from each additional unit decreases.
   • Explanation: The law of diminishing marginal utility helps explain why the demand curve slopes downward. As consumers consume more of a good, the marginal utility of each additional unit diminishes, reducing their willingness to pay higher prices for additional units.

Elasticity of Demand:

Elasticity of demand measures the responsiveness of quantity demanded to changes in price, income, or the prices of related goods. The main types of elasticity are:

1. Price Elasticity of Demand (Ed):
   • Formula:
     
     $��=\frac{\mathrm{\%}\text{ change in quantity demanded}}{\mathrm{\%}\text{ change in price}}$

      

     Ed=% change in price% change in quantity demanded​

   • Interpretation:
     • Elastic (Ed > 1): Demand is elastic if the percentage change in quantity demanded is greater than the percentage change in price.
     • Inelastic (0 < Ed < 1): Demand is inelastic if the percentage change in quantity demanded is less than the percentage change in price.
     • Unitary Elastic (Ed = 1): Demand is unitary elastic if the percentage change in quantity demanded is equal to the percentage change in price.
2. Income Elasticity of Demand (Ey):
   • Formula:
     
     $��=\frac{\mathrm{\%}\text{ change in quantity demanded}}{\mathrm{\%}\text{ change in income}}$

      

     Ey=% change in income% change in quantity demanded​

   • Interpretation:
     • Normal Goods (Ey > 0): Demand for normal goods is positively elastic. As consumer income increases, the quantity demanded also increases.
     • Inferior Goods (Ey < 0): Demand for inferior goods is negatively elastic. As consumer income increases, the quantity demanded decreases.
3. Cross-Price Elasticity of Demand (Exy):
   • Formula:
     
     $���=\frac{\mathrm{\%}\text{ change in quantity demanded of good X}}{\mathrm{\%}\text{ change in price of good Y}}$

      

     Exy=% change in price of good Y% change in quantity demanded of good X​

   • Interpretation:
     • Substitutes (Exy > 0): Goods are substitutes if an increase in the price of one leads to an increase in the quantity demanded of the other.
     • Complements (Exy < 0): Goods are complements if an increase in the price of one leads to a decrease in the quantity demanded of the other.

Measurement of Elasticity:

1. Point Elasticity:
   • Formula:
     
     $��=\frac{\text{change in quantity demanded}}{\text{change in price}}\times \frac{\text{average price}}{\text{average quantity demanded}}$

      

     Ed=change in pricechange in quantity demanded​×average quantity demandedaverage price​

   • Use: Point elasticity is used to measure elasticity at a specific point on the demand curve.
2. Arc Elasticity:
   • Formula:
     
     $��=\frac{\frac{\text{change in quantity demanded}}{\text{average quantity demanded}}}{\frac{\text{change in price}}{\text{average price}}}$

      

     Ed=average pricechange in price​average quantity demandedchange in quantity demanded​​

   • Use: Arc elasticity is used to measure elasticity over a range or interval on the demand curve.
3. Income Elasticity Formula:
   • Formula:
     
     $��=\frac{\text{change in quantity demanded}}{\text{change in income}}\times \frac{\text{average income}}{\text{average quantity demanded}}$

      

     Ey=change in incomechange in quantity demanded​×average quantity demandedaverage income​

4. Cross-Price Elasticity Formula:
   • Formula:
     
     $���=\frac{\text{change in quantity demanded of good X}}{\text{change in price of good Y}}\times \frac{\text{average price of good Y}}{\text{average quantity demanded of good X}}$

      

     Exy=change in price of good Ychange in quantity demanded of good X​×average quantity demanded of good Xaverage price of good Y​

Understanding elasticity and employing these measurements is crucial for businesses, policymakers, and economists in making informed decisions related to pricing, production, and market analysis.