The concepts of demand and supply are fundamental principles in economics that describe the relationship between the quantity of a good or service and its price in a market.
The income elasticity coefficient can be categorized into different types: normal goods, inferior goods, necessities and luxuries, and zero or very low income elasticity.
Determinants of demand/factors influencing demand include the price of the product, consumer preferences, income levels, the prices of related goods, and expectations about future prices.
The interaction of demand and supply in the market leads to the establishment of an equilibrium price and quantity, which are crucial in determining the efficient allocation of resources.
The concept of population is relevant to the understanding of demand in terms of market size, demographics, consumer preferences, income distribution, cultural and social factors, and population growth or decline.
In unitary elasticity (elasticity = 1), if the percentage change in quantity demanded is exactly equal to the percentage change in price, the demand is unitary elastic.
Elasticity of demand measures how responsive the quantity demanded of a good or service is to changes in price, income, or other factors affecting demand.
Factors that can produce a shift in the demand curve include incomechanges, prices of relatedgoods, tastes and preferences, expectations about futureprices or incomes, and population.
Perfectly inelastic demand is a situation in which the quantity demanded for a good or service remains constant regardless of any changes in its price.
The factors that affect the elasticity of demand include availability of substitutes, necessity vs luxuries, time horizon, and definition of the market.
In inelastic demand (elasticity < 1), if the percentage change in quantity demanded is less than the percentage change in price, the demand is considered inelastic.
In elastic demand (elasticity > 1), if the percentage change in quantity demanded is greater than the percentage change in price, the demand is considered elastic.
Understanding the elasticity of demand is crucial for businesses and policymakers to make informed decisions about pricing strategies, taxation policies, and market interventions.