Supply Elasticity

When the price of a product or service increases (for example: if the demand increases), the quantity produced usually increases. Similarly, when the demand decreases, the price decreases and the quantity produced usually decreases.

The variation in the quantity in the face of a price variation can be big or small. But how to measure if the responsiveness of the supply is big or small?


Types of Elasticity of Demand

The elasticity of demand measures the relative change in the total amount of goods or services that are demanded by the market or by an individual. The quantity demanded depends on several factors. Some of the most important factors are the price of the good or service, the price of other goods and services, the income of the population or person and the preferences of the consumers.