Elasticity

Supply and demand regulate the price of a commodity . This is certainly true not only in theory but also in practice. Everyone has already had the experience and / or had to make that a scarce supply leads in principle to the rising price - at least with the same demand. However, a rising price also means a drop in demand.

From a market point of view, this is a completely natural behavior of consumers. Since, however, this behavior of the consumer is not always the same in practice and can not always be identical, so-called elasticity concepts exist . These describe the behavior of consumers for possible price changes.

It is about whether and how much the consumption behavior of the market participants decreases or increases . This is generally dependent on which goods are within the scope of the consideration. With not every commodity, consumers can afford to stop or reduce their consumption. This applies, for example, to fuel and fuel. For this reason we are talking about a rather inelastic demand in this context.

Scarce goods of the same high price

Both price increases and price reductions would only have a minor effect on the quantities purchased by the consumers. The reason for this is that fuel and heating means are, for most people, one of the basic goods essential for the daily life. Savings and storage are hardly possible.

Even evasive goods are hardly available or often require expensive investments. In the case of luxury goods , on the other hand, a rather elastic demand can be observed. This means that price changes have a strong impact on the overall demand. Four elasticity terms are to be examined and explained in more detail below.

Content in the category Elasticity

• Completely inelastic demand


• Inelastic demand


• Elastic demand


• Fully elastic demand