The price elasticity of a product describes how sensitive suppliers and buyers are to changes in price. It doesn't change in relation to supply and demand, but it defines the slope of each curve. Show A product with high price elasticity of demand will see demand fall sharply when prices rise. For the product with high elasticity of demand, the downward-sloping demand curve appears flatter, and for every change in price, there is a large change to the quantity demanded. A demand curve for a product with low elasticity appears to be steeper, because the quantity demanded doesn't change much, even if prices do. Products with low price elasticity are described as being inelastic. Products with high price elasticity are generally non-staple goods. For example, the demand for teeth-whitening kits may be highly dependent on price and thus fairly elastic. The demand for toothpaste, on the other hand, might be relatively inelastic regardless of whether the price changes. A key factor affecting demand elasticity includes the availability of substitute goods, or goods that are very close to the product in question. The amount of time available to ponder different options and the type of good also matter; a consumer might drive around shopping for the best deal on items that consistently take large portions of a budget, such as groceries, while ignoring price differentials for small and relatively infrequent purchases, such as shoe polish. Similarly, a product with high price elasticity of supply has a flatter, upward-sloping curve. A product with a low elasticity of supply has a steeper curve. Price elasticity of supply can be calculated by dividing the percentage change in supply by the percentage change in price. The same factors that affect the elasticity of demand affect supply elasticity, namely the availability of substitute inputs and the time needed to make changes to production. (For related reading, see "How Does Price Elasticity Affect Supply?") What happens when the demand curve is more elastic?If a curve is more elastic, then small changes in price will cause large changes in quantity consumed. If a curve is less elastic, then it will take large changes in price to effect a change in quantity consumed. Graphically, elasticity can be represented by the appearance of the supply or demand curve.
What is the relationship between slope and elasticity of demand curve?The first term in that expression is just the reciprocal of the slope of the demand curve, so the price elasticity of demand is equal to the reciprocal of the slope of the demand curve times the ratio of price to quantity.
How does the slope of a supply or demand curve differ from elasticity of supply or demand?Elasticity is the ratio of the percentage changes. The slope of a demand curve, for example, is the ratio of the change in price to the change in quantity between two points on the curve. The price elasticity of demand is the ratio of the percentage change in quantity to the percentage change in price.
Which demand curve is more elastic?A flatter curve is relatively more elastic than a steeper curve. Availability of substitutes, a goods necessity, and a consumers income all affect the relative elasticity of demand.
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What happens to the slope of the demand curve as the good becomes more elastic why what about the supply curve?
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