Concept of Elasticities

Concept of elasticities

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Elasticity is considered to be effective in measure more level of variable sensitivity in terms of
change in another respective variable. In the terms of business economic, it has been clearly
identified the degree to which be the individuals, consumers to have change in demand supplied
to have respective response to price or income changes. In this report, there will be clear
discussion on the various aspect of elasticity in term of demand and supply.
MAIN BODY
Elasticity is an economic concept which have clear defining over the level of sensitivity of an
respective economic factors in terms another. To have the better understanding change in
respective price to the supply of demand or change in demand to change so respective income
will be measure (Feenstra and et.al.,2018). The usefulness of the concepts of elasticity of demand
to a firm that produces a fashionable product can be discussed in terms of how they can aid the
firm in making pricing and capacity decisions. In terms of product is considered to the elastic
when the quality demand of respective products changes in drastic manner with the change in
change increase or decrease. This have resulted in the product is stated to inelastic as the quality
demanded of the change have the slight changes when there is fluctuation in prices.
There are type o elasticity which are such as the demand elasticity, income elasticity, cross
elasticity and elasticity of supply. There is quantity demanded which depends multiple factors
such as price, income and reference. In perspective of demand elasticity which are in terms
income elasticity of demand and cross elasticity of demand (Ruderman, 2019).
Types of demand elasticity
The incomes are referring to the sensitivity in quality demanded for the certain level of goods
with change in real incomes by keeping the things constant. On the other hand, cross elasticity is
considered to be the responsiveness of the respective quantity demanded.
On the other hand, the price of elasticity of supply is helpful in measuring to have
responsiveness to supply of good after change in its market price. As per the economic theory, as
the supply will have the increasing when the respective price rises as conversely to have supply o
the good will decrease when its price decreases.
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