*Relative elasticity/inelasticity of demand indicates whether the percent change in demand quantity is less than percent change in price.In the long-term, demand for any product tends to be more "price elastic" due to the availability of substitutes.*

*Relative elasticity/inelasticity of demand indicates whether the percent change in demand quantity is less than percent change in price.*In the long-term, demand for any product tends to be more "price elastic" due to the availability of substitutes.

In keeping the price lower other firms may not be able to match this price and still make profits due to higher marginal costs and keeping the incentive low for entry Elasticity is an important measurement in our daily lives.

Economists using elasticity coefficient to measure the degree of elasticity or inelasticity by using the formula Price elasticity of demand = Percentage change in quantity demanded of product x Percentage change in price of product x This formula illustrate that we actually compute the percentage change in price of the product and the change in quantity demanded of the product. 42 Supply curve 43 Demand curve 44 Market equilibrium 45 Market surplus 46 Market shortage CHAPTER NO.

Discuss the importance of each of these to the decision making process within a typical business.

Elasticity is the responsiveness to which one variable responds to a change in another variable Price elasticity of demand (PED) measures the responsiveness of quantity demanded of a product to a Price elasticity of demand is defined as how demand changes as a result of a change in price.

In many cases, if both complement goods will not consumed, then neither will be purchase. Income A change in income causes a shift in demand, and income elasticity of demand calculate as the percentage change in demand divided by the percentage change in income determine the magnitude of this shift.

As you have seen income, elasticity of demand is higher for product perceived as luxuries.Elasticity of Demand also indicates whether revenue will increase or decrease.Substitute Cross-price elasticity of demand is calculated as the percent change in demand divided by the percent change in price of the substitute and will determine the magnitude of the shift in the demand curve.Satisfaction is greater when both goods would consume together than when they are consuming separately.Buying and consuming either good by itself is not quite as satisfying as both goods combined.Price elasticity is always positive for two substitutes.Complement Complements-in-consumption are two or more goods that satisfy wants or needs when consumed jointly.Elasticity of Labor Demand Labor is a derived demand realized by the demand for the product that the labour will be producing.The theory of labour demand is normally an inverse relationship between the demand for labour and the wage rate that a business needs to pay for each additional worker employed.In such event, there are various brands of similar goods What do you understand by the own-price elasticity of demand for a good? (a) What do you understand by the own-price elasticity of demand for a good?(b) Will a linear (straight line) demand curve have a constant own-price elasticity of demand? (c) Following the terrorists attacks in the USA on 11 September, there was a marked fall in business travel. of demand (PED) is a measure that captures the responsiveness of a good's quantity demanded to a change in its price. A shift in the demand curve could be resulting from changes in tastes, real income, population size and composition, consumer expectations or technological progress.

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