Supply and demand is a basic topic that every entrepreneur should understand. A company must be able to analyze the market situation and adequately set the price of its products and services. Prices cannot be set “out of thin air”. In order to maximize profits, it is important to understand how the market functions – that is, the laws of supply and demand.
Here, an important role is playd, firstly, by the idea of how different buyers can react to a specific decrease or increase in the cost of a product or service. Secondly, how the company itself can react, for example, to an increase or decrease in the cost of any resources: how much to increase or decrease the output of products and how quickly. Elasticity will help answer these questions.
In this article, we will analyze what elasticity is. We will study what elasticity is, what it depends on, analyze the main components that affect it, analyze formulas and a large number of examples. In particular, we will learn why elasticity can be useful for business.
What is demand in simple terms
Before looking at elasticity of demand and elasticity iran phone number list of supply, it is important to take a closer look at the basic economic concepts of supply and demand.
The concept of demand is the ned and willingness social media presence is essential of economic entities (individuals or companies) to purchase a desire product at a certain price.
Let us emphasize that in economics there are two different concepts that should not be confusd with each other: the volume (size) of demand and demand (nature of demand).
Let’s start with the volume of demand
It shows how much of a product consumers are willing to italy numbers buy at a given price in a specific period of time, with other external conditions remaining constant. For example, city residents are willing to buy 500 packs of rice at 80 rubles per unit. This is the volume of demand for this product at this price. The volume of demand will change under the influence of price. Let’s draw a graph where P is the price and Q is the sales volume.