lessaurn 4 elasticity Flashcards
degree of responsiveness of one variable to another variable
elasticity
measures the buyers and sellers reactions in price changes
elasticity
BUYERS’ reaction to changes in the price of goods and services
elasticity of demand
if the price increases, the quantity demand decreases, and if the price decreases, the quantity demanded increases
law of demand
consumers will only pay for a specific price. goods that are unimportant (luxury type)
elastic demand
goods that people only buy when the price is low (includes gadgets, pricey shoes, and clothes, luxury bags)
elastic demandc
consumers will play almost any price for the product
inelastic demand
at any price, people will still buy it because they need it to survive (food, water, clothing, shelter)
inelastic demand
change in price results in an equal change in quantity demanded. falls for the semi-luxury and semi-essential goods
unitary demand
without a change in price, there is an infinite change in quantity demanded. falls for the goods or services that have high competition in the market (gadgets)
perfectly elastic demand
change in price creates no change in quantity demanded. falls for the goods or services that involved a life-death situation. (medicine)
perfectly inelastic demand
whatever the price is, you have to buy or consume it, or else you will not survive
perfectly inelastic demand
factors can affect the responses of the buyers when the price changes
number of good substitutes
price increase in proportion to income
importance of the product to the consumers
reaction of the suppliers or producers of goods and services when there is an increase or decrease in price
elasticity of supply
five types of supply elasticity
elastic supply
inelastic supply
unitary supply
perfectly elastic supply
perfectly inelastic supply
change in price results in a greater change in quantity supplied. when they notice an increase in prices, they will produce more to incur more profits
elastic supply
change in price results to a lesser change in quantity supplied. farmers even with increases in price, they cannot quickly increase their production because they have to wait for their crops.
inelastic supply
a change in price results in an equal change in quantity supplies.
unitary supply
without a change in price, there is an infinite change in quantity supplied. even with the increase in laborers’ supply, laborers’ salary remains fixed or
without changes.
perfectly elastic supply
change in price does not affect quantity supplied.
perfectly inelastic supply
factor that can affect the responses of the sellers
time
formula of elasticity dwemand
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