ECONS Elasticities Size (5z)

Elasticity, like demand and supply, is always happening around us and an important factor that keeps the economy going. Elaticitry is a measure of responsiveness. It measures of how much something changes when there is a change in one of the factors that determines it. An easy way to understand this is by imagining a elastic/rubber band, when you apply force in strenching the elastic band, the elastic band will usually be longer, depending on the magnitude of the force applied. Since this is suppose to be a economic entry, i will be taking about the elasticity of demand, what is the elasticity of demand? Elasticity of demand is a measure of how much the demand of a product changes when there is a change in one of the factors that determine demand. There are three types of elasticity of demand and today i will be taking about the Price Elasticity of Demand [PED].

The price elasticity of demand is a measure of how much the quantity demnaded of a product changes when there is a change in the price of the product. If the above sentence isn't self-explanatory enough, just think it this way: then length of the elastic band is the demand, the longer the elastic band after strenched, the smaller the demand. The amount of force applied will be the amount of change of price of the product. (By the way, this example only works when the price of the product increases, since 'force' cannot be negative when price decreases.) There are two types of elasticity of demand, the inelastic demand and the elastic demand. A product is said to be demand inelastic if the quantity demanded of the product does not fall as much as the increase of price. A product is said to be elastic if the demand quantity of the product decrease way more than the increase in price.

For example, in Singapore, the sale of iphone is so popular, that almost every 1 out of 10 people of all age group owns an iphone. And for those reading this post AND owns an iphone, lets be honest, im sure you all will still buy yourself an iphone if it costs an extra hundred dollars. The sales of iphone is Singapore can be said to be really demand inelastic. Lets now look at the sales of iphone in another country, Japan. In Japan, the sales of iphone is absolutely terrible and companies such as Softbank and offering a FREE iphone with every two- year contract. This is because Japan has so many of its own home-made brand, iphone just isn't stylish enough for them. The demand for iphone in Japan can be said to be very elastic.

Prices of the same good may be different in different places of the world. Even in Singapore, it is the same, a product will be much cheaper in a certain area where the locals have less demand for it, so step of your comfort zone and happy hunting.


Yim Si Ze (5z)