Price Elasticity of Demand and Supply in Economics

This presentation discusses the concept of price elasticity of demand and supply in economics, including their definitions and formulas. It also covers the factors that affect price elasticity and the importance of understanding it. The presentation is relevant for students studying economics and related courses.

Economics

Table Of Content
 Introduction
 Price Elasticity of Demand and the factors that affect it
 Price Elasticity of supply and the factors that affect it
 CONCLUSION
 REFERENCES

INTRODUCTION
Economics may be defined as the
analysis of resource shortages which
aimed at producing goods and services
so, that organisation can meet the need
and demands of the consumer or the
target market (Cherunilam, 2020).

Price Elasticity of demand
Price Elasticity of demand may be defined as the ratio
of change in the percentage of the quantity demanded
of particular product to the change in the price of
particular product(Yadav and et. al., 2021). The
economists use the price elasticity of demand in order
to understand the change in demand if price changes.
 If the outcome came form the formula is greater
then 1, then the demand is elastic.
 If the number came from the formula is less then 1,
then the demand is Inelastic
 If the number equal to 1, then the demand is
unitary.

Factors that affect the price elasticity of
demand
 Nature or the types of products
 Availability of substitute goods
 Level of Income

Price elasticity of supply
Price elasticity of supply may be defined as a measure
which is used in the economics in order to show the
responsiveness of the quantity supplies because of
change in the price of the particular product. When the
coefficient is less than 1 then this can be called as
inelastic supply.
 When the coefficient is greater than 1 then this can
be known as elastic supply.
 When the coefficient is equal to 0 then this can be
described as perfectly inelastic supply.
 When the coefficient is equal to 1 then the supply
is perfectly elastic.

Factors that affect the price elasticity of
supply
 Spare production capacity
 Stocks of finished products and components
 The ease and cost of factor substitution
 Time period and production speed

Conclusion
 From the above report it has been
concluded that demand and supply is
considered as the most important
concept of the economics. Demand may
be defined as the requirement of the
goods in the market and supply means
the supply of goods to fulfil the
demand.

REFERENCES
 Cherunilam, F., 2020. International
Economics|. McGraw-Hill Education.
 Yadav, D and et. al., 2021. Reduction of
waste and carbon emission through the
selection of items with cross-price
elasticity of demand to form a sustainable
supply chain with preservation
technology. Journal of Cleaner
Production, 297, p.126298.