Elasticity is really important for predicting what happens in the market during tough times. Let’s break it down:
What is Demand Elasticity?
Demand elasticity helps us understand how much the amount of a product people want changes when prices go up or down.
During a crisis, like a natural disaster or when the economy isn’t doing well, certain things we need—like food and medicine—don't change much in demand.
People will buy these items no matter how much they cost. Because of that, businesses might raise their prices, which can cause shortages.
Supply Elasticity Matters Too
On the other hand, supply elasticity tells us how fast producers can change how much they make when prices change.
In a crisis, if production stops (like during a lockdown), suppliers may find it hard to make more products quickly.
This situation can result in higher prices and fewer goods available for people to buy.
Prediction Power
By looking at both demand and supply elasticities, we can guess how a crisis will affect prices and what’s available.
For example, if a lot more people need protective gear and at the same time the supply goes down, the prices can shoot up really high.
In short, understanding elasticity helps us see how people will behave and how the supply chain will react during tough times. This knowledge can help create better strategies for the market.
Elasticity is really important for predicting what happens in the market during tough times. Let’s break it down:
What is Demand Elasticity?
Demand elasticity helps us understand how much the amount of a product people want changes when prices go up or down.
During a crisis, like a natural disaster or when the economy isn’t doing well, certain things we need—like food and medicine—don't change much in demand.
People will buy these items no matter how much they cost. Because of that, businesses might raise their prices, which can cause shortages.
Supply Elasticity Matters Too
On the other hand, supply elasticity tells us how fast producers can change how much they make when prices change.
In a crisis, if production stops (like during a lockdown), suppliers may find it hard to make more products quickly.
This situation can result in higher prices and fewer goods available for people to buy.
Prediction Power
By looking at both demand and supply elasticities, we can guess how a crisis will affect prices and what’s available.
For example, if a lot more people need protective gear and at the same time the supply goes down, the prices can shoot up really high.
In short, understanding elasticity helps us see how people will behave and how the supply chain will react during tough times. This knowledge can help create better strategies for the market.