Elasticity of Demand
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Elasticity measures the responsiveness of quantity demanded to a change in price. It is calculated by finding the percentage changes in quantity and price and taking the ratio. An elasticity over 1 means demand is elastic and sensitive to price, under 1 means inelastic demand not sensitive to price, and exactly 1 means unitary elastic demand where quantity and price move proportionately. Demand for necessities tends to be inelastic while luxuries have elastic demand more impacted by price changes.
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Elasticity of Demand
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Elasticity of Supply
Elasticity of supply measures how responsive the quantity supplied is to changes in price. It can be elastic, inelastic, or unitary elastic. Elasticity is calculated by taking the percentage change in quantity supplied divided by the percentage change in price. If the result is greater than 1, supply is elastic. If it is less than 1, supply is inelastic. If it is exactly 1, supply is unitary elastic. Elastic supply responds strongly to price changes in the long run, while inelastic supply is not very sensitive to price changes in the short run. Unitary elastic supply means quantity and price move proportionately.
Elasticity Of Supply And Demand
Elasticity measures the responsiveness of quantity to price changes. It allows economists to compare markets without standardizing units. There are own price elasticities of demand and supply that measure responsiveness of quantity to the good's own price. Demand is more price sensitive when elasticity is further from zero. Total expenditures can increase or decrease with price changes depending on elasticity. Other elasticities include cross price and income elasticities.
Elasticity of Demand
This document discusses elasticity, which measures how responsive buyers and sellers are to changes in market conditions like price. It defines price elasticity of demand as the percentage change in quantity demanded given a percentage change in price. Demand can be elastic, inelastic, or unit elastic depending on how much quantities change relative to price changes. The document then examines factors that determine a good's elasticity like availability of substitutes, percentage of income spent, and whether it is a necessity or luxury. It also defines income elasticity as the responsiveness of quantity demanded to changes in consumer income.
demand , law of demand and elasticity of demand with explanation
This document discusses key concepts related to demand, including:
1. It defines demand as a desire backed by willingness and ability to purchase, and identifies three essential components of demand - desire, purchasing power, and willingness.
2. It explains demand analysis as determining factors affecting demand, measuring elasticity, forecasting demand, and increasing demand to efficiently allocate resources.
3. The law of demand states that quantity demanded is inversely related to price - as price increases, quantity demanded decreases, and vice versa.
4. Elasticity of demand measures responsiveness of quantity to price changes. There are three types: price, income, and cross elasticity. Price elasticity specifically measures the percentage change in
Price Elasticity of Demand
Price Elasticity of Demand measures how responsive demand is to changes in price. It is calculated by taking the percentage change in quantity demanded divided by the percentage change in price. Perfectly inelastic demand does not change with price changes. Inelastic demand changes less than proportionately to price changes. Unit elastic demand changes proportionately. Elastic demand changes more than proportionately. Factors like substitutes, necessity, income share, and time period impact price elasticity. Producers use elasticity estimates to predict revenue and tax impacts and for price discrimination.
Price Elasticity of Supply
The document discusses price elasticity of supply. It provides an example where the market for tractors is supplied by two firms, with a 10% price increase leading to a 10% output increase for one firm and 20% for the other, resulting in an overall price elasticity of supply of 1.5. It also discusses situations where a demand increase leads to no price change, indicating perfectly inelastic supply, and where a demand increase leads to a large price rise but small quantity rise, indicating inelastic supply. Potential reasons for short-term price elastic supply in an industry include spare capacity, high stock levels, and short production times.
PRICE ELASTICITY OF SUPPLY WITH EXAMPLES
Price elasticity of supply measures how responsive the quantity supplied of a good is to changes in its price. It is calculated as the percentage change in quantity supplied divided by the percentage change in price. The elasticity can be elastic (above 1), inelastic (below 1), unitary (equal to 1), perfectly elastic (infinite), or perfectly inelastic (zero). Factors like time, production capacity, and available inventory affect a good's price elasticity of supply. An example is provided where an individual's supply of bags was elastic, with a price elasticity of 4, as quantity supplied increased by 100% when price rose by 25%.
Recommended
Elasticity of Demand
Well prepared PPT for to express every view related to Elasticity of Demand.
Hope this is helpful...Good Luck!!!
Elasticity of Supply
Elasticity of supply measures how responsive the quantity supplied is to changes in price. It can be elastic, inelastic, or unitary elastic. Elasticity is calculated by taking the percentage change in quantity supplied divided by the percentage change in price. If the result is greater than 1, supply is elastic. If it is less than 1, supply is inelastic. If it is exactly 1, supply is unitary elastic. Elastic supply responds strongly to price changes in the long run, while inelastic supply is not very sensitive to price changes in the short run. Unitary elastic supply means quantity and price move proportionately.
Elasticity Of Supply And Demand
Elasticity measures the responsiveness of quantity to price changes. It allows economists to compare markets without standardizing units. There are own price elasticities of demand and supply that measure responsiveness of quantity to the good's own price. Demand is more price sensitive when elasticity is further from zero. Total expenditures can increase or decrease with price changes depending on elasticity. Other elasticities include cross price and income elasticities.
Elasticity of Demand
This document discusses elasticity, which measures how responsive buyers and sellers are to changes in market conditions like price. It defines price elasticity of demand as the percentage change in quantity demanded given a percentage change in price. Demand can be elastic, inelastic, or unit elastic depending on how much quantities change relative to price changes. The document then examines factors that determine a good's elasticity like availability of substitutes, percentage of income spent, and whether it is a necessity or luxury. It also defines income elasticity as the responsiveness of quantity demanded to changes in consumer income.
demand , law of demand and elasticity of demand with explanation
This document discusses key concepts related to demand, including:
1. It defines demand as a desire backed by willingness and ability to purchase, and identifies three essential components of demand - desire, purchasing power, and willingness.
2. It explains demand analysis as determining factors affecting demand, measuring elasticity, forecasting demand, and increasing demand to efficiently allocate resources.
3. The law of demand states that quantity demanded is inversely related to price - as price increases, quantity demanded decreases, and vice versa.
4. Elasticity of demand measures responsiveness of quantity to price changes. There are three types: price, income, and cross elasticity. Price elasticity specifically measures the percentage change in
Price Elasticity of Demand
Price Elasticity of Demand measures how responsive demand is to changes in price. It is calculated by taking the percentage change in quantity demanded divided by the percentage change in price. Perfectly inelastic demand does not change with price changes. Inelastic demand changes less than proportionately to price changes. Unit elastic demand changes proportionately. Elastic demand changes more than proportionately. Factors like substitutes, necessity, income share, and time period impact price elasticity. Producers use elasticity estimates to predict revenue and tax impacts and for price discrimination.
Price Elasticity of Supply
The document discusses price elasticity of supply. It provides an example where the market for tractors is supplied by two firms, with a 10% price increase leading to a 10% output increase for one firm and 20% for the other, resulting in an overall price elasticity of supply of 1.5. It also discusses situations where a demand increase leads to no price change, indicating perfectly inelastic supply, and where a demand increase leads to a large price rise but small quantity rise, indicating inelastic supply. Potential reasons for short-term price elastic supply in an industry include spare capacity, high stock levels, and short production times.
PRICE ELASTICITY OF SUPPLY WITH EXAMPLES
Price elasticity of supply measures how responsive the quantity supplied of a good is to changes in its price. It is calculated as the percentage change in quantity supplied divided by the percentage change in price. The elasticity can be elastic (above 1), inelastic (below 1), unitary (equal to 1), perfectly elastic (infinite), or perfectly inelastic (zero). Factors like time, production capacity, and available inventory affect a good's price elasticity of supply. An example is provided where an individual's supply of bags was elastic, with a price elasticity of 4, as quantity supplied increased by 100% when price rose by 25%.
ELASTICITY OF DEMAND
This document provides an overview of elasticity of demand, including:
- Definitions of price elasticity of demand and the types of elasticities, including perfectly elastic, perfectly inelastic, relatively elastic, relatively inelastic, and unit elastic demands.
- Factors that affect price and income elasticities of demand, such as commodity nature, availability of substitutes, and proportion of income spent.
- Explanations and diagrams demonstrating zero income elasticity, negative income elasticity, and positive income elasticity of demand.
- Measurements of income elasticity and how it is calculated using changes in quantity demanded and income.
- Other elasticities discussed include cross elasticity of demand and advertising
Price elasticity of supply
This document discusses the elasticity of supply. It defines supply and the law of supply. Elasticity of supply refers to the responsiveness of quantity supplied to changes in price. There are five types of elasticity: perfectly elastic, perfectly inelastic, elastic, inelastic, and unit elastic. Determinants that impact elasticity include the time period available to adjust supply, improvements in technology, stock availability, number of producers, and increases in production costs relative to output.
Lec 16 Income Elasticity of Demand
Income Elasticity of Demand
Income is an important variable affecting the demand for a good.
When there is a change in the level of income of a consumer, there is a change in the quantity demanded of a good, other factors remaining the same.
Ppt elasticity
This document discusses the concepts of price elasticity of demand and supply. It defines price elasticity of demand as a measure of how much quantity demanded responds to changes in price. Demand can be elastic, inelastic, or unit elastic depending on if the percentage change in quantity is greater than, less than, or equal to the percentage change in price. Factors like availability of substitutes and necessity of a good influence elasticity. Price elasticity of supply is defined similarly for quantity supplied responses to price changes. Production possibilities and storage abilities impact supply elasticity. Formulas are provided to calculate elasticities from percentage changes. Total revenue tests and expenditure tests can also indicate elasticity.
The theory of supply
The slides has been made upon the basics of " Theory of supply" on can read and take a general idea about the theory of supply.
Law of demand and its exceptions
The document discusses the law of demand, which states that as the price of a product increases, quantity demanded decreases, and vice versa. It defines the law of demand and explains that it shows the inverse relationship between price and quantity on a demand curve graph. The demand curve is downward sloping, with price on the vertical axis and quantity on the horizontal axis, and it holds all other factors that influence demand constant.
Theory of supply
Supply shows the behavior of suppliers. It shows the relationship between supply of goods and services and prices.
Concepts of elasticity
This document defines elasticity and discusses different types of elasticity, including:
- Price elasticity of demand measures responsiveness of quantity demanded to price changes. It can be elastic, inelastic, or unitary.
- Income elasticity of demand measures responsiveness of quantity demanded to changes in income. Goods can be normal, inferior, luxury, or necessity.
- Cross elasticity of demand measures responsiveness of demand for one good to price changes of other goods.
- Price elasticity of supply measures responsiveness of quantity supplied to price changes. Supply can be elastic, inelastic, or unitary. Determinants include time period and ability to adjust inputs.
Elasticity Of Demand
Elasticity measures the responsiveness of quantity to changes in price. Price elasticity of demand is calculated by taking the percentage change in quantity demanded over the percentage change in price. Demand is inelastic if the percentage change in quantity is less than the percentage change in price, elastic if it's greater, and unitary if changes are equal. Factors like substitutes, necessity, income spent, and storage affect elasticity.
Price Elasticity Of Supply - PES
Price elasticity of supply measures the responsiveness to the supply of a good or service after a change in its market price. According to basic economic theory, the supply of a good will increase when its price rises. Conversely, the supply of a good will decrease when its price decreases.
Economics Inflation
Inflation can be caused by demand pull, cost push, and increases in the money supply. Demand pull inflation occurs when aggregate demand exceeds supply, like during the Celtic Tiger in Ireland when easy credit led to rising house prices. Cost push inflation is due to supply constraints increasing costs, such as the 1970s oil crisis raising energy prices. Increasing the money supply, such as through printing money, led to hyperinflation in Zimbabwe and Yugoslavia in the late 20th century. High inflation can cause problems like worsening the balance of payments, increasing shoe leather and menu costs, and redistributing income away from those on fixed incomes.
Elasticity
Elasticity measures how much buyers and sellers respond to changes in market conditions, allowing for more precise analysis of supply and demand. Price elasticity of demand is the percentage change in quantity demanded given a percentage change in price. Demand tends to be more elastic for luxuries, over longer time periods, with more substitutes, and in more narrowly defined markets. Elasticity is calculated as the percentage change in quantity divided by the percentage change in price, and the midpoint formula is preferable. Elasticity can fall into ranges from perfectly inelastic to perfectly elastic, depending on how much quantity demanded responds to price changes. The slope of the demand curve is closely related to elasticity.
Price elasticity of demand
Power Point Presentation on Price elasticity of demand useful for students to make project on economics for 12th board examination.
Change in Supply and Quantity Supply
Supply meaning, Change in Supply, Change in quantity supply, Determinant of supply, Reason of changes in supply other than price of the products
Lec 12 Determinants of demand
Determinants of demand
The demand for a product is influenced by a number of factors. Determinants of demand (also called factors affecting demand) are the factors which cause the demand curve to shift.
Elasticity of Supply
1. Price elasticity of supply measures the responsiveness of quantity supplied to a change in price.
2. It is calculated as the percentage change in quantity supplied divided by the percentage change in price.
3. The elasticity of supply depends on factors like the type of product, production capacity, and time horizon. Products and industries with more flexible inputs and time to adjust will have a more elastic supply.
Law of demand
1) Demand is defined as the desire, ability, and willingness to purchase a good or service. It is influenced by factors like price, income, utility, habits, fashion, weather, advertising, taxation, and speculation.
2) The law of demand states that, all else equal, demand decreases when price increases as consumers will purchase less of a good, and demand increases when price decreases as consumers will buy more.
3) For the law of demand to hold true, there should be no changes in consumer income, preferences, prices of related goods, expectations of future prices, or other economic conditions like the quantity of money, taxes, or climate.
Price elasticity of demand
It is the degree of responsiveness of quantity demanded of a commodity due to change in price, other things remaining the same.
Elasticity of Demand
Elasticity of demand refers to the percentage change in quantity demanded of a good relative to a percentage change in one of its determinants, such as price. Price elasticity of demand specifically measures the responsiveness of demand for a good to changes in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. The degree of price elasticity depends on factors like the nature of the good, availability of substitutes, income level of consumers, and time period. Goods with perfectly inelastic or elastic demand will have a price elasticity of 0 or infinity, respectively.
supply economics
1. Supply is determined by a firm's resources, technology, and production plans to profitably produce a good or service.
2. The law of supply states that, all else equal, a higher price leads producers to supply a greater quantity while a lower price results in a smaller quantity.
3. Equilibrium in a market occurs when the quantity supplied equals quantity demanded at the equilibrium price, where buyers' and sellers' plans are balanced.
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Cost classification
This document discusses various ways to classify costs, including by nature, function, traceability, behavior, and relevance to decision making. It defines different types of costs such as direct and indirect materials, direct and indirect labor, variable and fixed costs, and relevant versus irrelevant costs. It provides examples to illustrate concepts like direct versus indirect costs, variable versus fixed costs, and relevant versus irrelevant costs in decision making.
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ELASTICITY OF DEMAND
This document provides an overview of elasticity of demand, including:
- Definitions of price elasticity of demand and the types of elasticities, including perfectly elastic, perfectly inelastic, relatively elastic, relatively inelastic, and unit elastic demands.
- Factors that affect price and income elasticities of demand, such as commodity nature, availability of substitutes, and proportion of income spent.
- Explanations and diagrams demonstrating zero income elasticity, negative income elasticity, and positive income elasticity of demand.
- Measurements of income elasticity and how it is calculated using changes in quantity demanded and income.
- Other elasticities discussed include cross elasticity of demand and advertising
Price elasticity of supply
This document discusses the elasticity of supply. It defines supply and the law of supply. Elasticity of supply refers to the responsiveness of quantity supplied to changes in price. There are five types of elasticity: perfectly elastic, perfectly inelastic, elastic, inelastic, and unit elastic. Determinants that impact elasticity include the time period available to adjust supply, improvements in technology, stock availability, number of producers, and increases in production costs relative to output.
Lec 16 Income Elasticity of Demand
Income Elasticity of Demand
Income is an important variable affecting the demand for a good.
When there is a change in the level of income of a consumer, there is a change in the quantity demanded of a good, other factors remaining the same.
Ppt elasticity
This document discusses the concepts of price elasticity of demand and supply. It defines price elasticity of demand as a measure of how much quantity demanded responds to changes in price. Demand can be elastic, inelastic, or unit elastic depending on if the percentage change in quantity is greater than, less than, or equal to the percentage change in price. Factors like availability of substitutes and necessity of a good influence elasticity. Price elasticity of supply is defined similarly for quantity supplied responses to price changes. Production possibilities and storage abilities impact supply elasticity. Formulas are provided to calculate elasticities from percentage changes. Total revenue tests and expenditure tests can also indicate elasticity.
The theory of supply
The slides has been made upon the basics of " Theory of supply" on can read and take a general idea about the theory of supply.
Law of demand and its exceptions
The document discusses the law of demand, which states that as the price of a product increases, quantity demanded decreases, and vice versa. It defines the law of demand and explains that it shows the inverse relationship between price and quantity on a demand curve graph. The demand curve is downward sloping, with price on the vertical axis and quantity on the horizontal axis, and it holds all other factors that influence demand constant.
Theory of supply
Supply shows the behavior of suppliers. It shows the relationship between supply of goods and services and prices.
Concepts of elasticity
This document defines elasticity and discusses different types of elasticity, including:
- Price elasticity of demand measures responsiveness of quantity demanded to price changes. It can be elastic, inelastic, or unitary.
- Income elasticity of demand measures responsiveness of quantity demanded to changes in income. Goods can be normal, inferior, luxury, or necessity.
- Cross elasticity of demand measures responsiveness of demand for one good to price changes of other goods.
- Price elasticity of supply measures responsiveness of quantity supplied to price changes. Supply can be elastic, inelastic, or unitary. Determinants include time period and ability to adjust inputs.
Elasticity Of Demand
Elasticity measures the responsiveness of quantity to changes in price. Price elasticity of demand is calculated by taking the percentage change in quantity demanded over the percentage change in price. Demand is inelastic if the percentage change in quantity is less than the percentage change in price, elastic if it's greater, and unitary if changes are equal. Factors like substitutes, necessity, income spent, and storage affect elasticity.
Price Elasticity Of Supply - PES
Price elasticity of supply measures the responsiveness to the supply of a good or service after a change in its market price. According to basic economic theory, the supply of a good will increase when its price rises. Conversely, the supply of a good will decrease when its price decreases.
Economics Inflation
Inflation can be caused by demand pull, cost push, and increases in the money supply. Demand pull inflation occurs when aggregate demand exceeds supply, like during the Celtic Tiger in Ireland when easy credit led to rising house prices. Cost push inflation is due to supply constraints increasing costs, such as the 1970s oil crisis raising energy prices. Increasing the money supply, such as through printing money, led to hyperinflation in Zimbabwe and Yugoslavia in the late 20th century. High inflation can cause problems like worsening the balance of payments, increasing shoe leather and menu costs, and redistributing income away from those on fixed incomes.
Elasticity
Elasticity measures how much buyers and sellers respond to changes in market conditions, allowing for more precise analysis of supply and demand. Price elasticity of demand is the percentage change in quantity demanded given a percentage change in price. Demand tends to be more elastic for luxuries, over longer time periods, with more substitutes, and in more narrowly defined markets. Elasticity is calculated as the percentage change in quantity divided by the percentage change in price, and the midpoint formula is preferable. Elasticity can fall into ranges from perfectly inelastic to perfectly elastic, depending on how much quantity demanded responds to price changes. The slope of the demand curve is closely related to elasticity.
Price elasticity of demand
Power Point Presentation on Price elasticity of demand useful for students to make project on economics for 12th board examination.
Change in Supply and Quantity Supply
Supply meaning, Change in Supply, Change in quantity supply, Determinant of supply, Reason of changes in supply other than price of the products
Lec 12 Determinants of demand
Determinants of demand
The demand for a product is influenced by a number of factors. Determinants of demand (also called factors affecting demand) are the factors which cause the demand curve to shift.
Elasticity of Supply
1. Price elasticity of supply measures the responsiveness of quantity supplied to a change in price.
2. It is calculated as the percentage change in quantity supplied divided by the percentage change in price.
3. The elasticity of supply depends on factors like the type of product, production capacity, and time horizon. Products and industries with more flexible inputs and time to adjust will have a more elastic supply.
Law of demand
1) Demand is defined as the desire, ability, and willingness to purchase a good or service. It is influenced by factors like price, income, utility, habits, fashion, weather, advertising, taxation, and speculation.
2) The law of demand states that, all else equal, demand decreases when price increases as consumers will purchase less of a good, and demand increases when price decreases as consumers will buy more.
3) For the law of demand to hold true, there should be no changes in consumer income, preferences, prices of related goods, expectations of future prices, or other economic conditions like the quantity of money, taxes, or climate.
Price elasticity of demand
It is the degree of responsiveness of quantity demanded of a commodity due to change in price, other things remaining the same.
Elasticity of Demand
Elasticity of demand refers to the percentage change in quantity demanded of a good relative to a percentage change in one of its determinants, such as price. Price elasticity of demand specifically measures the responsiveness of demand for a good to changes in its price. It is calculated as the percentage change in quantity demanded divided by the percentage change in price. The degree of price elasticity depends on factors like the nature of the good, availability of substitutes, income level of consumers, and time period. Goods with perfectly inelastic or elastic demand will have a price elasticity of 0 or infinity, respectively.
supply economics
1. Supply is determined by a firm's resources, technology, and production plans to profitably produce a good or service.
2. The law of supply states that, all else equal, a higher price leads producers to supply a greater quantity while a lower price results in a smaller quantity.
3. Equilibrium in a market occurs when the quantity supplied equals quantity demanded at the equilibrium price, where buyers' and sellers' plans are balanced.
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This document discusses various ways to classify costs, including by nature, function, traceability, behavior, and relevance to decision making. It defines different types of costs such as direct and indirect materials, direct and indirect labor, variable and fixed costs, and relevant versus irrelevant costs. It provides examples to illustrate concepts like direct versus indirect costs, variable versus fixed costs, and relevant versus irrelevant costs in decision making.
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Classification of cost
* Beginning raw materials inventory: $32,000
* Raw materials purchased: $276,000
* Ending raw materials inventory: $28,000
* Raw materials available for use: $32,000 + $276,000 = $308,000
* Raw materials used: Raw materials available - Ending inventory = $308,000 - $28,000 = $280,000
The cost of direct material used is $280,000.
The answer is C.
material was still present. What is the cost of
direct material used?
A. $276,000
B. $272,000
C. $280,000
D. $ 2
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This document provides an introduction to cost accounting concepts from an expert at the Indian Institute of Technology Mumbai. It defines key cost accounting terms like direct costs, indirect costs, fixed costs, variable costs, and period costs. It also outlines different ways to classify costs such as by element, function, variability, and relevance. The objectives of cost accounting are explained as ascertaining costs, cost control and reduction, and assisting management with decision making.
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Chapter 2 cost terms, concepts and classifications 2012 students(1)
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This document provides an overview of price elasticity of demand (PED) and price elasticity of supply (PES). It defines these concepts and explains how to calculate PED and PES values. The key determinants of PED are also outlined. Examples are provided to illustrate elastic versus inelastic demand and supply. The implications of elasticity for revenue and pricing decisions are discussed. Students are provided with a self-evaluation checklist and homework assignments involving elasticity calculations.
Elasticity of demand www.it-workss.com
Managerial Economics & Business Economics Concepts for MBA, BBA, B. Com, M. Com Students.
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https://www.it-workss.com/
Economics 1 l04_v01
The document discusses the concept of elasticity of demand and its types. It defines elasticity of demand as the percentage change in quantity demanded given a percentage change in a determinant like price. It then explains the different types of elasticity based on the quantum of change in quantity demanded relative to the change in price - perfectly inelastic, inelastic, unitary, elastic and perfectly elastic demand. The determinants that impact price elasticity like availability of substitutes and nature of need are also outlined.
Elasticity & forecasting
Elasticity measures how responsive demand or supply is to changes in price. Price elasticity of demand specifically refers to the percentage change in quantity demanded given a percentage change in price. Elasticity is calculated using various methods and provides important insights for businesses in determining pricing and revenue impacts. Forecasting demand, including for new products, allows businesses to effectively plan resources and operations.
2Elasticity Analysis.pdf
This document discusses price elasticity of demand. It defines price elasticity as a measure of how responsive the quantity demanded is to changes in price, with all other factors held constant. An elastic demand means a large change in quantity demanded for a small change in price. Inelastic demand means a small change in quantity demanded for a large change in price. The document provides the formula for calculating price elasticity and illustrates examples of perfectly inelastic, unit elastic, and perfectly elastic demand curves. It also discusses how price elasticity relates to total revenue and the factors that influence a good's elasticity, such as availability of substitutes and proportion of income spent.
2Elasticity Analysis.pdf
This document discusses price elasticity of demand, including how to calculate it using percentage changes in price and quantity demanded. It explains that elasticity can be used to determine how total revenue will change if price changes, and identifies factors that influence a good's elasticity, such as availability of substitutes. Elasticity of demand can be perfectly inelastic, unit elastic, or perfectly elastic. The document also introduces concepts of cross elasticity of demand and income elasticity of demand.
My elasticity
1. Elasticity is a measure of how responsive quantity is to price changes. It compares percentage changes in quantity and price.
2. Demand can be inelastic (|ED| < 1), unitary (|ED| = 1), or elastic (|ED| > 1). Inelastic demand leads to higher total revenue from a price rise.
3. Factors like availability of substitutes, importance of the good, and time horizon affect price elasticity of demand. Income elasticity measures responsiveness to income changes.
ElasticityofDemandSuply.ppt
This document discusses various types of elasticities, including price elasticity of demand, income elasticity of demand, cross-price elasticity of demand, and elasticity of supply. It defines each type of elasticity as the percentage change in one variable in response to a percentage change in another. For price elasticity of demand, it is the percentage change in quantity demanded divided by the percentage change in price. The document discusses how elasticity can be used to understand the impact of price changes on total revenue and how determinants like availability of substitutes impact elasticity.
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2.4 concepts of elasticity and use of labour demand elasticity.
2.4 concepts of elasticity and use of labour demand elasticity.
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Elasticity of Demand
- 1. Elasticity of Demand What is it and how is it measured?
- 2. Elasticity Defined Elasticity is defined by Amosweb.com as “The relative response of one variable to changes in another variable”. For our Economics purposes, the definition further states that “the price elasticity of demand, one of the more important applications of this concept in economics, is the percentage change in quantity demanded measured against the percentage change in price.” Thus, the two variables in question are: The quantity supplied Price
- 3. Elasticity can take three forms: Elastic: When the quantity demanded is very sensitive to price Inelastic: When the quantity demanded is not very sensitive to price Unitary Elastic When the quantity demanded moves in lock- step with price change i.e. A 10% increase in Price yields a 10% decrease in Quantity demanded
- 4. Elasticity is calculated as follows: 1. Calculate the percentage change in Quantity Demanded Absolute value of [(Initial Quantity – New Quantity) / ((Initial Quantity + New Quantity)/2))] * 100 = percentage (%) change of quantity demanded 2. Calculate the percentage change in Price Absolute value of [(Initial Price – New Price) / ((Initial Price + New Price)/2))] * 100 = percentage (%) change of price 3. Calculate the Elasticity % change of Quantity / % change of Price = Elasticity
- 5. What do the numbers mean? If the result of the Elasticity calculation is greater than 1, the relationship is said to be Elastic. If the result of the Elasticity calculation is less than 1, the relationship is said to be Inelastic. If the result of the Elasticity calculation is exactly 1, the relationship is said to be Unitary Elastic.
- 6. Elastic Demand When Demand is Elastic, price has a large impact on the demand for a good. This is generally true for luxury items, such as Jewelry, as they are not required to exist. Examples Include: Jewelry Houses Cars
- 7. Inelastic Demand Inelastic Demand indicates that price has very little impact on the demand for a good. This is generally true for essentials, such as Food, as they are required to exist. Examples Include: Food Clothing Utilities
- 8. Unitary Elastic Demand Unitary Elastic Demand indicates that the percentage change in the price of the good will equal the percentage change in the demand for the good. Examples Include: Any good with an Elasticity of Demand Calculation equaling 1!