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Elastic goods are goods where a change in price leads to a change in the quantity demanded. Examples of this would be clothes. If Store X raised their prices, the public would substitute and buy clothes from Store Y instead.
Inelastic goods are where a change in the price does not lead to a significant change in the quantity demanded. A good example of this would be medicine. Even if a pharmaceutical company increases their prices, their customers STILL need their medication, so they will still purchase it at the higher price.
A change in elasticity can arise from the market for certain products expanding. A good can become more elastic if more substitute goods are introduced to the market. On the other hand, a good can become more inelastic if substitute goods are taken off the market.
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Why is elasticity important?
Because it shows how the market reacts to the change in price. therefore, companies would have to look at elasticity before they change their price. Governments also look at elasticity when changing tax rate to get the highest tax revenue possible.
What are different types of elasticity?
The elasticity of demand refers to how sensitive the demand for a good is to changes in other economic variables. The different types are: price elasticity, income elasticity, cross elasticity and advertisement elasticity.
What are the 3 types of elasticity?
1)price elasticity of demand 2)income elasticity of demand 3)cross elasticity of demand
How do you calculate the quantity demanded when the elasticity is given?
To calculate the quantity demanded when the elasticity is given, you can use the formula: Quantity Demanded (Elasticity / (1 Elasticity)) (Price / Price Elasticity). This formula helps determine the change in quantity demanded based on the given elasticity and price.
If the elasticity of demand is equal to one then the demand is?
Unitary elasticity is when the price elasticity of demand is exactly equal to one.
