ATAR Notes: Forum

Uni Stuff => Commerce => Faculties => Economics => Topic started by: Odette. on September 02, 2008, 09:35:45 pm

Title: Elasticity
Post by: Odette. on September 02, 2008, 09:35:45 pm

Ok I'm having a little bit of trouble understanding the concept of Elasticity, any help would be appreciated xD Thanks.

Title: Re: Elasticity
Post by: costargh on September 02, 2008, 09:39:53 pm

Yep
   Elasticity of demand refers to how responsive consumers are in reaction to a change in price. Inelastic demand means that a large change in price will only cause a marginal decrease in the amount of a good/service demanded. Elastic demand means that a small change in price will lead to a large decrease in the quantity of a good/service demanded. Factors that affect demand elasticity are:
•   Whether the purchased is perceived to be urgent or whether it can wait and alternatives can be found.
•   Cost and availability of substitute goods.
•   The percentage of income which is spent on that good or service (an expensive good will be more elastic)
•   Whether the good is perceived as being either a necessity or a luxury

   Elasticity of supply refers to the responsiveness of suppliers to a change in price. Inelastic supply means that a large change in price will lead to a minimal change in the quantity of a good/service produced. Elastic supply means that a small change in price will lead to a large change in the quantity of goods/services produced. Factors that affect elasticity of supply are:
•   The ability to store.
•   The mobility of resources.
•   Producer expectations.

Also see here,
http://economics.mrwood.com.au/unit1/mm/mm11.asp

Title: Re: Elasticity
Post by: Odette. on September 02, 2008, 09:44:05 pm

Thanks Costargh ^_^ I kinda get it now :) (Didn't really grasp the concept because the lecturer kinda skimmed through it)

Title: Re: Elasticity
Post by: maine on July 07, 2009, 03:59:54 pm

Gotta love mr wood

Title: Re: Elasticity
Post by: Over9000 on July 07, 2009, 04:37:34 pm

F = kx where k is the constant of elasticity

Title: Re: Elasticity
Post by: xXNovaxX on August 30, 2009, 07:54:06 pm

i HATE elasticity, we touched a little on it in VCE, it's such a difficult concept to grasp for ME because it isn't really sometihng u come across in ur day to day life.

Title: Re: Elasticity
Post by: maine on August 31, 2009, 02:50:12 pm

Quote from: xXNovaxX on August 30, 2009, 07:54:06 pm

i HATE elasticity, we touched a little on it in VCE, it's such a difficult concept to grasp for ME because it isn't really sometihng u come across in ur day to day life.

I beleive that it's easy to grasp: just think about the demand for video games opposed to bread, or oil. Think about how a price change in theese, would affect how many you would buy

Title: Re: Elasticity
Post by: AppleXY on August 31, 2009, 05:38:33 pm

Elasticity = % Change in Quantity / % Change in Price