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Elasticity Economics - Muhammad Saad - Coggle Diagram
Elasticity Economics - Muhammad Saad
Types of Elasticity
Income Elasticity [DEFINITION]
Income Elasticity of demand is how responsive customer demand for a product is when there is a change in consumer income.
Price Elasticity of Supply [DEFINITION]
The price elasticity of supply is a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price.
Price Elasticity of Demand [DEFINITION]
Price elasticity of demand, or elasticity, is the degree to which the effective desire for something changes as its price changes. In general, people desire things less as those things become more expensive.
Formulas
n > 1 - Elastic
n < 1- Inelastic
Factors that influence Elasticity
Factors that influence Elasticity of Demand:
Nature of commodity:
Availability of substitutes:
Income Level:
Level of price:
Postponement of Consumption:
Number of Uses:
Share in Total Expenditure:
Time Period:
Factors that influence Elasticity of Supply
There are numerous factors that impact the price elasticity of supply including the number of producers, spare capacity, ease of switching, ease of storage, length of production period, time period of training, factor mobility, and how costs react.
Factors that influence Income Elasticity
The main factor affecting income elasticity of demand is whether or not goods are necessities or luxuries. Necessities are basic goods that consumers need to buy. Examples include food in general, electricity and water. Demand for these types of goods will be income inelastic.
