Elasticity of Supply and Demand
- Pages: 2
- Word count: 326
- Category: Supply and Demand
A limited time offer! Get a custom sample essay written according to your requirements urgent 3h delivery guaranteedOrder Now
The field of economics has this huge focus on the concepts of supply and demand.. Along with them is the concept of elasticity. Elasticity of supply and demand refers to the responsiveness of buyers to the changes in prices (“Elasticity of Demand and Supply,” 2007a). They are also often referred to as price elasticities o demand and supply. In mathematical approaches, the elasticity of demand and supply is given by these equations:
Elasticity could also come in many forms. Demand and supply can be elastic, inelastic, and unit elastic. A perfectly elastic demand suggests that a small change in price would trigger a huge change in the demand. On the other hand, if the price elasticity of the demand is said to be inelastic or the elasticity is equal to zero, it means that any change in price would have no effect in the change of the quantity demanded. It means that price is unresponsive to demand. Lastly, if the demand is unit elastic, it means that every unit change in price causes another unit change in demand. The same principles apply to the case of the supply (“Elasticity of Demand and Supply,” 2007b).
If it is impossible for someone to get the elasticity of demand or supply, he or she may refer to the slope. However, referring to the slope may not be applied to other purposes. With elasticity of demand and supply, you will have to use percentages which do not require any unit. Through this, elasticity can be used to measure the responsiveness of demand or supply regardless of the measure (Supply and demand, 2007).
Elasticity of Demand and Supply. (2007a). Retrieved July 18, 2007, from http://www.trading-glossary.com/e0075.asp
Elasticity of Demand and Supply. (2007b). Retrieved July 18, 2007, 2007, from http://www.pinkmonkey.com/studyguides/subjects/eco/chap2/e0202402.asp
Supply and demand. (2007, July 18). In Wikipedia, The Free Encyclopedia. Retrieved 11:11, July 18, 2007, from http://en.wikipedia.org/w/index.php?title=Supply_and_demand&oldid=145414799