# elasticity Essay

425 Words2 Pages
Elasticity is the tool of measuring the Markets opinion about prices and quantity Demanded ;Supplied. It's the most popular tool among the World and ,Everybody use it because it simplifies data analysis,thus,no one uses other ways because it's more accurate and more simple. Importance of elasticity: 1.Corporations how to make their prices 2.Consumer surplus. 3.Producer surplus 4.Government surplus 5. Ease on Economists to study their market well. Elasticity's idea is to describe the responsiveness of quantity supplied or quantity demanded TO price. Price Elasticity: When there's an Essential good like fuel if it's price increase ,Consumers cant stop using it so they'll search for a substitute some of poor people installed gas system in their cars,lowermiddle level people put 80 instead of 92 or 90,higher middle-level people put 90 instead of 92 … This is a very Elastic Example of price elasticity. Classifying the demand and supply as Elastic or inelastic: when the quantity's percentage is more the price percentage then the quantity demanded or the quantity supplied then this case is Elastic. E>=1 and if the price percentage is more than the quantity's percentage then this case will be Inelastic. E<1 there's two types of price elasticity: Price elasticity of Demand & price elasticity of supply: PED's rule: ED=% &#916; in quantity demanded %&#916; in price PES's rule: ES =%&#916; in quantity supplied %&#916; in price calculating price elasticity using graph: %change in price: P2-P1 (P1+P2)/2 %change in quantity: Q2-Q1 *100 (Q1+Q2)/2 types of Elastic and Inelastic Demand: this is a figure of Perfectly inelastic demand: this is a figure of perfectly Elastic demand figure:: Factors that help elasticity: 1.substitutes: when there's a lot of substitutes in the market for the same product Elasticity happens,thus,when