Question

What is/are the significance of the issues of Elasticity of Demand economically?

Answer 1

Elasticity is one of the most basic concepts of economics. Elasticity is part of the field of microeconomics and it is crucial to know this concept, as well as its consequences. The concept of elastic and inelastic goods directly affects the pricing of companies on their products. Therefore, it is important for the investor to have a good sense of this indicator. This concept concerns how much variation in demand occurs in a variation in the price of a given product.

Elasticity can also be calculated by dividing variations by averages of quantities and final prices. People usually have a slope in the negative demand for goods. That is, people consume more when the price of a good is lower.

In the future the elasticity of demand can become something very harmful that increases values ​​very dramatically and can take the economy to a difficult path to reverse