Name : Muhammad Hoqqil Fatwa

NIM : 19522214

INTRODUCTION TO ECONOMIC

ELASTICITY AND IT’S APPLICATION

RESUME

We pay consumers to buy more goods, are more expensive, compile their money higher,
compile prices of goods higher, or compile prices of complementary goods lower. Our
discussion of demand is qualitative, not quantitative. Related, we discuss Directions in which
there is no change in size. To measure the number of consumers responding to changes in
these variables, economists use the concept of elasticity. In other words, elasticity allows us
to analyze supply and demand with greater precision. Also elasticity is a measure agreed
upon by buyers and sellers in response to changing market conditions. The price elasticity of
demand is the sum of a large amount issued from the highest price. demand is a percentage
change from what is considered a percent change in price. Because the demand curve
reflects more economic, social, and psychological forces that shape consumer preferences,
there is no simple universal rule for what determines the elasticity of the demand curve.
Based on experience, we can determine some rules of thumb about what affects the price
elasticity of demand.
Availability of Replacement Close. Goods with close substitutes tend to have more elastic
demand because it's easier for consumers to switch from good goods to others. For
example, butter and margarine are easily replaced.

Needs versus Luxury. Needs tend to have inelastic demand, while luxury has elastic
demands. When the price of a doctor's visit goes up, people won't dramatically reduce the
number of times they go to the doctor, even though they might go a bit less often.
Conversely, when the price of a sailboat rises, the number of sailboats requested falls
substantially. The reason is that most people view doctor visits as necessities and sailboats
as luxury items. Market Definition. Demand elasticity. In any market depends on how we
draw market boundaries.

A narrowly defined market tends to have more elastic demand than a broadly defined
market because it is easier to find substitutes that are close to narrowly defined goods. Time
Horizon. Goods tend to have more elastic demand for a longer period of time. When the
price of gasoline rises, the amount of gasoline requested drops only slightly in the first few
months.
How do you calculate the elasticity of demand prices? Economical Calculates the price
elasticity of demand due to a percentage change in the amount collected by a percentage
change in price. That is, the price elasticity of demand is equal to the percentage change
issued by the percentage change in price. For example, suppose that an increase of 10
percent in the price of ice cream is 20 percent. We calculate the elasticity of your demand
because the elasticity of the demand price is equal to 20%: 10% = 2.

Variation in Demand Curves, Economists classify demand curves based on their elasticity.
Demand is considered elastic compilation elasticity is greater than 1, which means greater
than proportionally more than price. Demand is considered not elastic elasticity of less than
1, which means higher than proportionally lower than price. If the elasticity is right 1, the
demand moves with an amount equal to the proportional price, and the approved request
has a unit elasticity. Because the price elasticity of demand measures more than the amount
demanded for price change responses, it is closely related to the slope of the demand curve.
The following rule of thumb is a useful guide: The higher the demand curve past a certain
point, the greater the price elasticity of demand. The more demand curves that pass a
certain point, the smaller the price elasticity of demand. So I can support it because the
Inelastic Quantity Request that receives does not strongly support price changes. And the
price elasticity of demand is less than one. Also Demand Elastic Quantities that respond
strongly to price changes. And the price elasticity of demand is greater than one. Perfect
Inelastic Quantities that are not supported by price changes. Perfect Elasticity demands
unlimited change with any price changes. The Elastic Quantity unit requests a change of the
same percentage as the price.

Demand price elasticity measures how much quantity demanded responds to price
changes. The price elasticity of demand is calculated as a percentage change in the quantity
demanded divided by the percentage change in price. If the demand curve is elastic, total
income falls when prices rise. If it is not elastic, total income rises with price increases. The
income elasticity of demand measures how much demand requests respond to changes in
consumer income. Cross-price elasticity of demand measures how much the quantity
demanded of one item responds to the price of another item. Supply price elasticity
measures how much the amount offered responds to price changes. In most markets, supply
is more elastic in the long run than in the short run. Bid price elasticity is calculated as a
percentage change in the amount supplied divided by the percentage change in price.
Supply and demand tools can be applied in various types of markets.