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Elasticity fill-in

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Shaner Adams
Shaner Adams
United States

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Elasticity fill-in

by Shaner Adams
1

Anyone who has studied economics knows the law of demand : a price will lead to a quantity demanded . What you may not know is how much lower the quantity demanded will be . Similarly , the law of supply states that a higher will lead to a higher quantity . The question is : How much higher ?

Elasticity is an economics concept that measures of one variable to changes in another variable . Suppose you drop two items from a second - floor balcony . The first item is a tennis ball . The second item is a brick . Which will bounce higher ? Obviously , the . We would say that the tennis ball has greater .
Both the demand and supply curve show the relationship between price and the number of units demanded or supplied . Price elasticity is the ratio between the change in the demanded ( Qd ) or supplied ( Qs ) and the corresponding percent change in . The price elasticity of is the percentage change in the quantity demanded of a good or service divided by the percentage change in the price . The price elasticity of is the percentage change in quantity supplied divided by the percentage change in price .

We can usefully divide elasticities into broad categories : elastic , inelastic , and unitary . Because price and quantity demanded move in directions , price elasticity of demand is always a number . Therefore , price elasticity of demand is usually reported as its value , without a negative sign . An elastic demand or elastic supply is one in which the elasticity is than one , indicating a responsiveness to changes in price . Elasticities that are less than one indicate responsiveness to price changes and correspond to demand or supply . elasticities indicate proportional responsiveness of either demand or supply .

Text adapted from https : / / openstax . org / books / principles - economics - 2e / pages / 5 - introduction - to - elasticity , https : / / openstax . org / books / principles - economics - 2e / pages / 5 - 1 - price - elasticity - of - demand - and - price - elasticity - of - suppl y

 
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