elasticity

Question 1

what is price elasticity

Answer 1

preice elasticity measures the responsiveness of the quanitiy supplied to a change in price

Question 2

what 4 factors effect supply

Answer 2

1. time
2. nature
3. ability of the stock inventory

Question 3

how does time effect the price elasticty of supply

Answer 3

time impacts price elasaticty by influencing how quickly a firms can adjust to production. in the short run, constraints like fixed factors and limited capacity lead to less elastic supply. in the long run, firms can adjust production more flexibly, resulting in a more elastic supply responce

Question 4

how does nature effect price elasticity of supply

Answer 4

sesonal fluctuation, climate events like droughts and hurricanes, resource depletion, environmental regulation and technological advancments all play roles.

Question 5

how does ability to stock the inventory effect price elasticity of supply

Answer 5

high storage costs may discourgage firms from maintaing large amounts of stock, leading to a less elastic supply curve. effective inventory managmennt handles seasonal demand and supply fluctuations, improving elasticty.

Question 6

define price elasticyt of demand

Answer 6

the responsivness of quanity demanded to a change in price of the good or service

Question 7

when is demand said to be elastic

Answer 7

when a change in price leads to a more than proportional change in quantity demanded

Question 8

when is demand said to be inelastic

Answer 8

when a change in price leads to a less prportional change in quantity demanded

Question 9

when is demand said to be unitary

Answer 9

whne quanitty demanded will change by the same proportion of the price chnage

Question 10

what are the types of elasticty

Answer 10

perfectly elastic
pefectly inelastic

Question 11

define perfectly elastic

Answer 11

any chnage in price leads to consumers stop buying the product. buyers will demand an amount at the given price, byt none at all at the price slightly above market price

Question 12

define perfectly inelastic

Answer 12

any chnage in price leads to no change in the quantity demanded. buyers will demand a certain amount of the product no matter the price.

Question 13

what are the 5 factors effecting price elasicty of demand

Answer 13

1. availabilty of subsitutes
2. whether the good is a luxury or neccessity
3. the proportion of income spent
4. time
5. is consumption a habit?

Question 14

how does the proportion of income spent effect price elasticty of demand

Answer 14

essential goods which consumer a large income share, have inelastic demand. but goods that use a smaller income share like luxuries, show elastic demand.

Question 15

how does time effect price elasticity of demand

Answer 15

in the short run, demand can be inelastic for essentials as consumers ahve limited options to adjust immediatly to price changes. However, over time, consumers can make signifciant adjustments, such as seeking aternative and changes consumptions habits.

Question 16

how does consumptions habits effect price elasticity of demand

Answer 16

regular purchases and precieved neccesaties lead to less elastic demand, seen in groceries or hygiene items. Brand loyalty also reduces elasticty, as loyal customers spend more for a certain brand. habits play a role too, with consumers sticking to certain products no matter the price chnages.