Before looking at elasticity of demand and elasticity 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 need and willingness of economic entities (individuals or companies) to purchase a desired product at a certain price.
Let us emphasize that in economics there are two different concepts that should not be confused 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 fantuan database 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.
The graph shows the change in the volume or quantity of demand
At point D1, the manufacturer sets the price at P1 (100 rubles). For this price, buyers are willing to buy only Q1 goods, because the price is too in portugal the suburbs of lisbon revolt after the death high for them (5 units). The manufacturer will receive 500 rubles in revenue (100*5).
In this case, it is not the point within a single demand curve that changes, but the position of the line itself on the graph. A shift to the right means that “demand increases.” If it decreases, the curve shifts to the left.
The shift in the line is caused by non-price
Factors that influence the decision, willingness, or ability cyprus business directory of buyers to make purchases in general at any fixed price.
For example, let’s imagine that in country “X” the most fashionable trend of the season is ushanka hats. If earlier people were ready to buy only 100 hats for 1000 rubles, now demand is growing, and for the same 1000 rubles they are ready to buy 200 hats. Because the market and conditions have changed. As a result, we will see the demand line move to the right, as shown in the graph.