basic micro elasticity

• elasticity


  a measured responsiveness of one variable to another. As used in economics, is a general concept that describes the proportional change in quantity relative to a proportional change in the price of the goods, or the proportional change in a shift factor such as income or price of another price.
• price elasticity of demand


  is a measurement of the change in the demand for a product in relation to a change in its price. Elastic demand is when the change in demand is large when there is a change in price.
• inelastic of demand


  demand remains constant regardless of economic changes
• factors that affect price elasticity of demand

  availability of substitutes, necessity vs. luxury, time horizon, income level
• Income elasticity of demand refers to the changes in the demand for a certain good with the changes in the real income of consumers, who buy it keeping all other things constant. It is the percentage change in

  quantity demanded divided by the percentage change in income.
• types of income elasticity

  negative, positive, zero
• cross elasticity of demand is an economic concept that measures the response to the quantity demanded of one good when the price of another good change. It is calculated by dividing the percentage change in the quantity demanded of one good by the percentage change in the price of another good.
• Substitute goods are a set of goods that satisfy more or less similar wants and that can

  be used in each other’s place.
• Complementary goods are those goods that are either jointly used or one good provide a sense of accomplishment or is used to add value to another good.
• price elasticity of supply Elasticity is a summary measure of how the supply or demand of a particular good is changes in price. Elasticity is defined as a proportionate change in one variable over the change in another variable
• perfectly elastic supply is infinite, where the quantity supplied is unlimited at a given price, but no quantity can be supplied at any other price
• price elasticity supply greater than one means supply is relatively elastic, where the quantity supplied changes by a larger percentage than the price change.
• Unitary Elasticity Supply has a PES of one, where the quantity supplied changesby the same percentage as the price change.
• The PES for relatively inelastic supply is between zero and one. That means the percentage change in quantity supplied changes by a lower percentage than the percentage of price change.
• Perfectly inelastic supply is when the PES formula equals zero. That is, there is no change in quantity supplied when the price changes