0Elasticity is a measure of the responsiveness of quantity to changes in price or some other variable.
The most commonly used elasticity concept is price elasticity of demand.
The price elasticity of demand is the percentage change in quantity demanded divided by the percentage change in price.
May be abbreviated as hd or ED.
Determinants of the Price Elasticity of Demand: -
1. The close substitutes for a good, the more elastic is demand.
2. The longer the time interval, the more elastic is a good’s demand.
3. The more specific the good, the more elastic is demand.
4. The ??? a good is a necessity, the more elastic is demand.
Price Elasticity of Supply
The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.
May be abbreviated as hs or ES.
Determinants of the Price Elasticity of Supply:-
1. The short-run supply curve is somewhat elastic or inelastic
2. In the long run, significant substitution is possible; the supply curve becomes very ???
