**📅 Date:** ➤ ⌈ [[2025-01-11-Sat 〚 Elasticity〛]]⌋ **💭 Note:** ➤ A measure of the **responsiveness** of **quantity** demanded or quantity supplied to **a change** in one of its determinants. ➤ ==Responsiveness==, ==Quantity==, A ==Change== ⇩ 🅻🅸🅽🅺🆂 ⇩ **🏷️ Tags**: #💰/Economy #💰/Noun **🗂 Menu**: ⌈[[✢ M O C ➣ 01 ⌈J A N - 2 0 2 5⌉ ✢|2025-J A N-MOC]]⌋ ➤ ⌈[[Elasticity Exercise-1]]⌋ ➤ ⌈[[Elasticity Exercise -2]]⌋ ➤ ⌈[[💰 The Extremes and Balance of Elasticity]]⌋ **📑 PDF**：[[L06 - Elasticity.pdf]] --- ### I. Definition • Elasticity measures the **responsiveness** of **quantity demanded** or **quantity supplied** to a **change** in one of its determinants, such as price. • Key elements include **responsiveness**, **quantity**, and **change**. These terms must be present when discussing elasticity; otherwise, it’s not refer to this concept. ### II. Types of Elasticity #### 1) Perfectly ==Inelastic==: - Quantity remains unchanged regardless of price changes (e.g., life-saving medicine, limited water supply). #### 2) Perfectly Elastic: Quantity is highly sensitive to price changes (e.g., foreign exchange fees for traders). >[!info] Elasticity varies depending on the good’s necessity and availability of substitutes. ### III. Elasticity and Dependency Relationship • When **elasticity is high**, dependency on the good is low (consumers can easily switch). • When **elasticity is low**, dependency on the good is high (consumers rely on the good despite price changes). • Elasticity shifts with price changes, reflecting a good’s sensitivity to market conditions. ### Additionally 1. **Decision-Making**: It helps analysts understand how sensitive consumers or producers are to changes in price, income, or other factors, which is crucial for pricing strategies, market analysis, and forecasting. 2. **Revenue and Costs**: Elasticity insights are vital for assessing how price changes impact total ==revenue, profit margins, and demand.== 3. **Macroeconomic Analysis**: It supports evaluating the impact of policy decisions, such as taxation or subsidies, on market behaviour.