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19 sie 2024 · Elasticity is a term used in economics to describe responsiveness in one variable to changes in another. Typically, elasticity is used to describe how much demand for a product...
Elasticity is a measure of how responsive one variable is to changes in another variable, such as price and quantity. Learn how elasticity depends on factors like substitutes, budget share, time, and type of good.
We can understand these changes by graphing supply and demand curves and analyzing their properties. Toilet paper is an example of an elastic good. Image courtesy of Nic Stage on Flickr. Keywords: Elasticity; revenue; empirical economics; demand elasticity; supply elasticity.
Elasticity is a unitless ratio, independent of the type of quantities being varied. An elastic variable (with an absolute elasticity value greater than 1) responds more than proportionally to changes in other variables. A unit elastic variable (with an absolute elasticity value equal to 1) responds proportionally to changes in other variables.
Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded—or supplied—divided by the percentage change in price.
We will explore the answers to those questions in this chapter, which focuses on the change in quantity with respect to a change in price, a concept economists call elasticity. Anyone who has studied economics knows the law of demand: a higher price will lead to a lower quantity demanded.
Syllabus. . Meet the TAs. . Unit 1: Supply and Demand. . Introduction to Microeconomics. . Applying Supply and Demand. . Elasticity. . Problem Set 1. . Unit 2: Consumer Theory. . Preferences and Utility. . Budget Constraints. . Problem Set 2. .
