microeconomics

What are Elasticity and Its Types?

Elasticity measures how much the quantity demanded or supplied of a good responds to changes in price or other factors. There are several types of elasticity:
Price Elasticity of Demand (PED): Measures how much the quantity demanded changes in response to a price change.
Income Elasticity of Demand (YED): Measures how the quantity demanded changes as consumer income changes.
Cross-Price Elasticity of Demand (XED): Measures the responsiveness of demand for one good to a change in the price of another good.
Price Elasticity of Supply (PES): Measures how much the quantity supplied changes in response to a price change.
Understanding elasticity helps businesses predict how changes in prices, incomes, or other products' prices will affect their sales and revenue.

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