Elasticity

Definition
- the percentage changes in the quantity demanded over the percentage of the determinant that caused the changes in the above quantity.

- There are four type of elasticity:

(i) Price Elasticity Demand (PeD)

(ii) Price Elasticity of Supply (PeS), =1 unit elasticity, >1 Elastic where quantity supply is relatively responce to the changes of price and < 1 is inelastic where the quantity supply is non relative to the changes of price.

(iii) Cross Elasticity of Demand (CeD), >1 refers to Substitude goods, <1 refers to Complimentary goods.

(iv) Income Elasticity of Demand (Yed), >1 refers to Normal Goods and <1 refers to Inferior Goods.