Elasticities of demand and supply (eco)

• ELASTICITY is a measure of a variable’s sensitivity to a change in another variable, most commonly this sensitivity is the change in price relative to changes in other factors.
• coefficient of elasticity is the number obtained when the percentage change in demand or supply
• Elastic - a change in a determinant will lead to a proportionately greater Change in demand or supply.
• Inelastic - a change in determinant will lead to a proportionately lesser change in demand or supply.
• Unitary Elastic - a change in determinants will lead to a proportionately equal to a change in demand or supply
• Three types of elasticity of demand deal with the responses to a change in the price of the good, in income, and in the price of related goods - substitute or complementary
• This measures the responsiveness of demand to a change in the price of the good. One of the measures of the price elasticity of demand is arc elasticity.
• INCOME ELASTICITY OF DEMAND measures how the quantity demanded changes as consumer income changes.
• Cross Price Elasticity of Demand measures how the quantity demanded changes as the price of a related good change
• The price elasticity of supply is the measure of the responsiveness in quantity supplied to a change in price for a specific good