Elasticity is an important concept that helps us understand how changes in price can affect supply and demand.
Price Elasticity of Demand: This looks at how much the amount people want to buy changes when the price goes up or down. For example, if movie ticket prices go up, fewer people might buy them. This shows high elasticity because the demand drops a lot when the price rises.
Price Elasticity of Supply: This shows how much the amount suppliers are willing to provide changes when the price changes. For example, if the price of oranges goes up, farmers might quickly supply more oranges to take advantage of the higher price. This shows high elasticity too because the supply can change easily with the price.
In short, elasticity helps us see how much people and producers react to price changes. This understanding is important for how markets work.
Elasticity is an important concept that helps us understand how changes in price can affect supply and demand.
Price Elasticity of Demand: This looks at how much the amount people want to buy changes when the price goes up or down. For example, if movie ticket prices go up, fewer people might buy them. This shows high elasticity because the demand drops a lot when the price rises.
Price Elasticity of Supply: This shows how much the amount suppliers are willing to provide changes when the price changes. For example, if the price of oranges goes up, farmers might quickly supply more oranges to take advantage of the higher price. This shows high elasticity too because the supply can change easily with the price.
In short, elasticity helps us see how much people and producers react to price changes. This understanding is important for how markets work.