Elasticity is a measure of the relationship between quantity demanded or quantity supplied to a change in one of its determinants such as price or income, which affects the quantity demand or supplied.
Price Elasticity of Demand
The law of demand states that a fall in the price of a good raises the quantity demanded. The price elasticity of demand measures how much the quantity demand responds to a change in price. Demand is said to be inelastic if the quantity demanded responds only slightly to changes in the price. In other words we can defined as the percentage change in quantity demanded to the proportional change in price.
Price Elasticity of supply
The law of supply states that higher prices raise the quantity supplied. The prices elasticity of supply depends on the flexibility of sellers to change the amount of the good they produce. Supply of good is said to be elasticity if the quantity supplied responds substantially to change in the price.
Price Elasticity of Demand
The law of demand states that a fall in the price of a good raises the quantity demanded. The price elasticity of demand measures how much the quantity demand responds to a change in price. Demand is said to be inelastic if the quantity demanded responds only slightly to changes in the price. In other words we can defined as the percentage change in quantity demanded to the proportional change in price.
Price Elasticity of supply
The law of supply states that higher prices raise the quantity supplied. The prices elasticity of supply depends on the flexibility of sellers to change the amount of the good they produce. Supply of good is said to be elasticity if the quantity supplied responds substantially to change in the price.
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