Эластичность спроса и предложения

Demand elasticity is the change in quantity demanded per change in a demand determinant. Although there are several demand determinants, such as consumer preferences, the main determinant with which demand elasticity is measured is the change in price.

The price elasticity of demand is equal to the percentage change in quantity demanded divided by the percentage change in price.

 

Price Elasticity of Demand =

Quantity Change Percentage Price Change Percentage

 

If a large change in price results in little change in quantity, then demand is considered to be inelastic. If a small change in price results in large changes in quantity, then demand is considered to be elastic.

Elasticity of Demand
If demand elasticity	< 1	then demand is	inelastic
	= 1		unit elastic
	> 1		elastic

 

Elasticity = 1

This case is referred to as unitary elasticity. The change in quantity demanded is in the same proportion as the change in price. A change in price in either direction therefore would result in no change in revenue.

Elasticity > 1

In this case, the change in quantity demanded is proportionately larger than the change in price.

 

Elasticity < 1

In this case, the change in quantity demanded is proportionately smaller than the change in price.

Factors Influencing the Price Elasticity of Demand

 

The price elasticity of demand for a particular demand curve is influenced by the following factors:

 

Availability of substitutes: the greater the number of substitute products, the greater the elasticity.

 

Degree of necessity or luxury: luxury products tend to have greater elasticity than necessities.

 

Some products that initially have a low degree of necessity are habit forming and can become "necessities" to some consumers.

 

Proportion of income required by the item: products requiring a larger portion of the consumer's income tend to have greater elasticity.

 

Time period considered: elasticity tends to be greater over the long run because consumers have more time to adjust their behavoir to price changes.

 

Permanent or temporary price change: a one-day sale will result in a different response than a permanent price decrease of the same magnitude.

 

Price points: decreasing the price from $2.00 to $1.99 may result in greater increase in quantity demanded than decreasing it from $1.99 to $1.98.

Responsiveness of producers to changes in the price of their goods or services. As a general rule, if prices rise so does the supply.

 

Elasticity of supply is measured as the ratio of proportionate change in the quantity supplied to the proportionate change in price. High elasticity indicates the supply is sensitive to changes in prices, low elasticity indicates little sensitivity to price changes, and no elasticity means no relationship with price. Also called price elasticity of supply.

  

 

Elasticity of supply

 

PEoS = (% Change in Quantity Supplied)

                (% Change in Price)

 

Formula

Income elasticity of demand

Income elasticity of demand (YED) shows the effect of a change in income on quantity demanded.

Income is an important determinant of consumer demand, and YED shows precisely the extent to which changes in income lead to changes in demand. YED can be calculated using the following equation:

 

 

% change in (∆) quantity demanded   

 

% change in (∆) income (Y)

There are five possible income demand curves:

1. High income elasticity of demand:

In this case increase in income is accompanied by relatively larger increase in quantity demanded. Here the value of coefficient Ey is greater than unity (Ey>1). Eg: 20% increase in quantity demanded due to 10% increase in income.

 

2. Unitary income elasticity of demand:

In this case increase in income is accompanied by same proportionate increase in quantity demanded. Here the value of coefficient Ey is equal to unity (Ey=1). Eg: 10% increase in quantity demanded due to 10% increase in income.

 

3. Low income elasticity of demand:

In this case proportionate increase in income is is accompanied by less than increase in quantity demanded. Here the value of coefficient Ey is less than unity (Ey<1). Eg: 5% increase in quantity demanded due to 10% increase in income.

 

4. Zero income elasticity of demand:

This shows that quantity bought is constant regardless of changes in income. Here the value of coefficient Ey is equal to zero (Ey=0). Eg: No change in quantity demanded even 10% increase in income.

 

5. Negative income elasticity of demand:

In this case increase in income is accompanied by decrease in quantity demanded. Here the value of coefficient Ey is less than zero/negative (Ey<0). Eg: 5% decrease in quantity demanded due to 10% increase in income.

 

                                           Normal goods

 

When the equation gives a positive result, the good is a normal good. A normal good is one where demand is directly proportional to income. For example, if, following an increase in income from £40,000 to £50,000, an individual consumer buys 40 DVD films per year, instead of 20, then the coefficient is:

 

+100   +25  

 

= (+) 4.0  

 

The positive sign means that the good is a normal good, and because the coefficient is greater than one, demand for the good responds more than proportionately to a change in income. This indicates the good is not a necessity like food, and would be considered a relative luxury for this individual.

Inferior goods

 

When YED is negative, the good is classified as inferior. For example, if, following an increase in income from £40,000 to £50,000, a consumer buys 180 loaves of bread per year instead of 200, then the YED is:

 

+-10   +25  

 

= (-) 0.4  

 

The negative sign means that the good is inferior, and, because the coefficient is less than one, demand for the good does not respond significantly to a change in income. This indicates that the good is not particularly inferior compared with a good which has a YED of  > (-)1.

 

Cross price elasticity of demand measures the percentage change in demand for a particular good caused by a percent change in the price of another good. Goods can be complements, substitutes or unrelated. A change in the price of a related good causes the demand curve to shift reflecting a change in demand for the original good. Cross price elasticity is a measurement of how far, and in which direction, the curve shifts horizontally along the x-axis. A positive cross-price elasticity means that the goods are substitute goods.