What's it: Arc elasticity is a measure of elasticity based on two given points. Suppose you measure the own-price elasticity of demand. In that case, it is the percentage change in quantity demanded divided by the percentage change in price
Elasticity
Elasticity of Demand: Types, Formula, Key Factors
What's it: Elasticity of demand measures the responsiveness of a product's demand to changes in determining factors such as its price (own-price), the price of other goods, and income. To calculate this, you divide the percentage change in
Own-Price Elasticity of Demand: Formula, Calculation, Types, Importance
Own-price elasticity of demand measures how responsive demand is when the price of goods changes. It is elastic or responsive when a slight change in price causes a more significant change to the quantity demanded. In contrast, when the quantity
Normal Goods: Meaning, Elasticity
Normal goods are groups of products whose demand increases when consumer incomes rise. Conversely, when consumer incomes fall, demand for them also falls. Various items of your daily needs, such as soap, tea, clothes, coffee, are examples of
Unitary Elastic of Demand: Meaning and Explanation
Unitary elasticity of demand is a situation in which the price change affects the quantity demanded at an equivalent percentage. For example, when the price of a good rises 3%, the quantity demanded decreases by 3%. And, when the price drops by 3%,
Income elasticity of demand: Meaning, Formula, How to Calculate
How responsive changes in income affect demand is income elasticity (income elasticity of demand). Income is one of the determinants of demand for a product—the demand quantity changes when income changes. In general, the quantity of demand
Substitute Goods: Meaning, Elasticity, Examples
Substitute goods refer to two or more goods that meet similar needs, so they become alternatives to each other. For example, Coca-Cola is a close substitute for Pepsi. Because it is an alternative, consumers switch to their substitutes when