Report on the Concept of Elasticities in Business Economics

This report provides an overview of the concept of elasticity in business economics. It begins with an introduction to elasticity, defining its role in measuring the sensitivity of variables to changes in other variables, particularly in relation to consumer demand and supply in response to price or income changes. The main body delves into the types of elasticity, including demand, income, cross, and supply elasticity, and how these concepts are useful for businesses in making pricing and capacity decisions. It differentiates between elastic and inelastic products and discusses the factors influencing demand elasticity. The report concludes by summarizing the key aspects of elasticity and its impact on business decisions, emphasizing the importance of understanding how changes in price affect the quantity demanded or supplied. The report references several academic sources to support its analysis.

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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Hence, companies with high elasticity will have completely have the high elasticity to have
compete to have the high volume of sales as transaction to remain solvent. Firm that are inelastic
which have goods and services than must haves by enjoying the luxury by setting the higher
prices (Pretko and Radzihovsky, 2018). Beyond the elasticity have the good and services which
will have the effect on the customer retention rates company on the other hand, it more level to
contradict that’s when it comes to this elasticity if they do not know what price the market will
support. In addition to that too many consumers for a good will cause a shortage of it and one
may lose customers if one cannot produce the good. If they mark the price down too much, the
company may lose money if it costs more to produce. Business have the offering to sell the
goods to make the customer’s more remaining loyal and continues to have purchasing the good
and services even the face of price in increase manner.
CONCLUSION
As per the basic term, the product is stated to inelastic as the quality demanded of the change
have the slight changes when there is fluctuation in prices (Hendren, 2016). 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.
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REFERENCES
Books and Journals
Online
Feenstra, R.C and et.al.,2018. In search of the Armington elasticity. Review of Economics and
Statistics, 100(1), pp.135-150.
Ruderman, M.S., 2019. Fluid Dynamics and Linear Elasticity. Springer International Publishing.
Pretko, M. and Radzihovsky, L., 2018. Fracton-elasticity duality. Physical review letters,
120(19), p.195301.
Hendren, N., 2016. The policy elasticity. Tax Policy and the Economy, 30(1), pp.51-89.
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