The value of the price elasticity of demand for a good will be relatively large when

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Examples of elastic in the following topics:

• Definition of Price Elasticity of Supply

  • The state of these factors for a particular good will determine if the price elasticity of supply is elastic or inelastic in regards to a change in price.
  • Supply is "perfectly elastic."
  • An increase in price for an elastic good has a noticeable impact on consumption.
  • The elasticity of a good will be labelled as perfectly elastic, relatively elastic, unit elastic, relatively inelastic, or perfectly inelastic.
  • Differentiate between the price elasticity of demand for elastic and inelastic goods

• Income Elasticity of Demand

  • A positive income elasticity is associated with normal goods.
  • A negative income elasticity is associated with inferior goods.
  • In all, there are five types of income elasticity of demand :
  • Zero income elasticity of demand (YED=0): A change in income has no effect on the quantity bought.
  • Income elasticity of demand measures the percentage change in quantity demanded as income changes.

• Tax Incidence and Elasticity

  • Tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
  • The key concept is that the tax incidence or tax burden does not depend on where the revenue is collected, but on the price elasticity of demand and price elasticity of supply.
  • If the consumer is elastic, the consumer is very sensitive to price.
  • Because the consumer is elastic, the quantity change is significant.
  • Explain how elasticity influences the relative tax burden between suppliers and consumers (demand).

• Measuring the Price Elasticity of Supply

  • The price elasticity of supply is the measure of the responsiveness of the quantity supplied of a particular good to a change in price.
  • The price elasticity of supply is directly related to consumer demand.
  • The elasticity of a good provides a measure of how sensitive one variable is to changes in another variable.
  • When calculating the price elasticity of supply, economists determine whether the quantity supplied of a good is elastic or inelastic.
  • PES = infinity: Supply is perfectly elastic.

• Calculating Elasticities

  • The basic elasticity formula has shortcomings which can be minimized by using the midpoint method or calculating the point elasticity.
  • Two alternative elasticity measures can be used to avoid or minimize the shortcomings of the basic elasticity formula.
  • The midpoint method calculates the arc elasticity, which is the elasticity of one variable with respect to another between two given points on the demand curve .
  • The arc elasticity is obtained using this formula:
  • As elasticity is often expressed without the negative sign, it can be said that the demand for hot dogs has an elasticity of 0.4.

• Elastic Arteries

  • An elastic artery or conducting artery is an artery with a large number of collagen and elastin filaments in the tunica media.
  • The pulmonary arteries, the aorta, and its branches together comprise the body's system of elastic arteries.
  • Due to position as the first part of the systemic circulatory system, and thus the high pressures it will experience immediately adjacent to the heart the aorta is perhaps the most elastic artery and features an incredibly thick tunica media rich in elastic filaments.
  • In elastic arteies the tunica media is very rich with elastic and connective tissue.
  • The aorta makes up most of the elastic arteries in the body.

• Interpretations of Price Elasticity of Demand

  • When PED is greater than one, demand is elastic.
  • The first is when demand is perfectly elastic.
  • Perfectly elastic demand is represented graphically as a horizontal line .
  • At the midpoint, E1, elasticity is equal to one, or unit elastic.
  • Perfectly elastic demand is represented graphically by a horizontal line.

• Muscular Arteries

  • Distributing arteries are medium-sized arteries that draw blood from an elastic artery and branch into "resistance vessels".
  • Muscular, or distributing, arteries are medium-sized arteries that draw blood from an elastic artery and branch into "resistance vessels" including small arteries and arterioles.
  • In contrast to the mechanism elastic arteries use to store and dissipate energy generated by the heart's contraction, muscular arteries contain layers of smooth muscle providing allowing for involuntary control of vessel calibre and thus control of blood flow.
  • Muscular arteries can be identified by the well defined elastic lamina which lies between the tunicae intima and media.

• Measuring the Price Elasticity of Demand

  • The price elasticity of demand (PED) is calculated by dividing the percentage change in quantity demanded by the percentage change in price.
  • The own-price elasticity of demand is often simply called the price elasticity.
  • The following formula is used to calculate the own-price elasticity of demand:
  • However, economists often disregard the negative sign and report the elasticity as an absolute value.
  • Similarly, at high prices and low quantities, PED is more elastic .

• Elasticity of Demand

  • In general, the more substitues there are for a product, the more elastic it is.
  • Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price.
  • The demand for a good is said to be elastic (or relatively elastic) when its PED is greater than one (in absolute value): that is, changes in price have a relatively large effect on the quantity of a good demanded.
  • A number of factors can thus affect the elasticity of demand for a good:
  • Identify the key factors that determine the elasticity of demand for a good

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