How to Calculate Elastic Consumption in 2025

Calculating the elastic consumption of garments involves understanding how consumers respond to changes in price and income in relation to clothing purchases. Elasticity measures the responsiveness of quantity demanded to changes in price (price elasticity of demand) or changes in consumer income (income elasticity of demand). 

Here's a guide on how to calculate these elasticities in the context of garments:

1. Price Elasticity of Demand (PED)

Formula: $\text{Price Elasticity of Demand (PED)} = \frac{\%\text{ Change in Quantity Demanded}}{\%\text{ Change in Price}}$

Price Elasticity of Demand (PED)=% Change in Price% Change in Quantity Demanded​

Steps:

1. Gather Data:

   • Obtain the initial quantity demanded (Q1) and the new quantity demanded (Q2) after a price change.
   • Record the initial price (P1) and the new price (P2).

2. Calculate Changes:

   • Calculate the change in quantity demanded: $\Delta Q = Q2 - Q1$
   • Calculate the change in price: $\Delta P = P2 - P1$

3. Calculate Percentage Changes:

   • Calculate the percentage change in quantity demanded: $\%\Delta Q = \frac{\Delta Q}{Q1} \times 100$
   • Calculate the percentage change in price: $\%\Delta P = \frac{\Delta P}{P1} \times 100$

4. Apply the PED Formula:

   • Plug the percentage changes into the PED formula: $\text{PED} = \frac{\%\Delta Q}{\%\Delta P}$

Interpretation of PED:

• PED > 1: Elastic demand (consumers are sensitive to price changes).
• PED < 1: Inelastic demand (consumers are less sensitive to price changes).
• PED = 1: Unit elastic (percentage change in quantity demanded is equal to percentage change in price).

2. Income Elasticity of Demand (YED)

Formula: $\text{Income Elasticity of Demand (YED)} = \frac{\%\text{ Change in Quantity Demanded}}{\%\text{ Change in Income}}$

$\text{I}$ncome Elasticity of Demand (YED)=% Change in Income% Change in Quantity Demanded​

Steps:

1. Gather Data:

   • Obtain the initial quantity demanded (Q1) and the new quantity demanded (Q2) after a change in consumer income.
   • Record the initial income level (I1) and the new income level (I2).

2. Calculate Changes:

   • Calculate the change in quantity demanded: $\Delta Q = Q2 - Q1$
   • Calculate the change in income: $\Delta I = I2 - I1$

3. Calculate Percentage Changes:

   • Calculate the percentage change in quantity demanded: $\%\Delta Q = \frac{\Delta Q}{Q1} \times 100$
   • Calculate the percentage change in income: $\%\Delta I = \frac{\Delta I}{I1} \times 100$

4. Apply the YED Formula:

   • Plug the percentage changes into the YED formula: $\text{YED} = \frac{\%\Delta Q}{\%\Delta I}$

Interpretation of YED:

• YED > 1: Luxury good (demand increases more than proportionally as income rises).
• YED < 1: Necessity (demand increases less than proportionally as income rises).
• YED < 0: Inferior good (demand decreases as income rises).

Conclusion

Calculating elastic consumption of garments requires understanding consumer behavior regarding price and income changes. By applying the formulas for price elasticity of demand (PED) and income elasticity of demand (YED), you can assess how responsive consumers are to these changes in the context of clothing purchases. This information can be valuable for pricing strategies, marketing efforts, and inventory management in the garment industry.