Elasticity

Elasticity

1. A measure of the sensitivity or responsiveness of quantity demanded to changes in price of the good itself, income pr the price of other goods

2. Demand Elasticities

   • Price elasticity of Demand
     • A measure of the responsiveness of quantity demanded to a change in its own price
     • Coefficients
     • Usefulness
     • Determinants
       • Availability of Substitutes
       • Share of budget spent on product
       • Time
       • Luxury or Necessity
   • Income Elasticity of Demand
     • A measure of the responsiveness in quantity demanded in response to a change in income
   • Cross Price elasticity of Demand
     • A measure of the responsiveness in quantity demanded for one good to a change in price of another related good

3. Price Elasticity of Supply

   • Determinants
     • Time
     • Resource Substitution Possibilities
   • Measures the responsiveness of quantity supplied to a change in the price of the good itself

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