MICROECONOMICS

Student name : Zaid lallo

Student ID : 1610249

Supervised by : Dr.Marwan Nahleh

Faculty of business and finance

Department : Business administration

Topic : Elasticity and its application

Research importance :
 Define elasticity and it's types
 Feed your information bank with new and not traded ideas and
knowledge
 Having evidence and a simplified examples for any case included
 Get a proper experience in the art of economics

Introduction : economics is a very wide science and it takes a huge effort

to reach a result , there is a many different topics or headlines in the
economics in this research it's will talk about elasticity especially with a
convincing applications
 Elasticity and its application

First thing before we deepen up in elasticity types and applications

We should first define it

What is 'Elasticity'
Elasticity is a measure of a variable's sensitivity to a change in another
variable.

In business and economics, elasticity refers the degree to which

individuals, consumers or producers change their demand or the amount
supplied in response to price or income changes. It is predominantly used
to assess the change in consumer demand as a result of a change in a good
or service's price.

When the value of elasticity is greater than 1, it suggests that the demand
for the good or service is affected by the price, A value that is less than 1
suggests that the demand is insensitive to price.

Elasticity is an economic concept that's used to measure the change in the

aggregate quantity demanded for a good or service in relation to price
movements of that good or service. A product is considered to be elastic if
the quantity demand of the product changes drastically when its price
increases or decreases. Conversely, a product is considered to be inelastic
if the quantity demand of the product changes very little when its price
fluctuates.

To make it easier to us Diabetics For example, insulin is a product that is

highly inelastic. For diabetics who need insulin, the demand is so great
that price increases have very little effect on the quantity demanded. Price
decreases also do not affect the quantity demanded; most of those who
need insulin aren't holding out for a lower price and are already making
purchases.
elastic is a economic term intended to depict an adjustment in the conduct
of purchasers and merchants because of a value change for a decent How
the interest for the great responds in light of an adjustment in cost decides
its flexibility or inelasticity. The elasticity of a decent can differ as
indicated by the measure of close substitutes, its relative cost and the
measure of time that has slipped by since the value change happened.

On the other side of the equation are highly elastic products. Bouncy
balls, for example, are highly elastic in that they aren't a necessary good,
and consumers will only decide to make a purchase if the price is low.
Therefore, if the price of bouncy balls increases, the quantity demanded
will greatly decrease, and if the price decreases, the quantity demanded
will increase.

On the off chance that a decent or administration has flexible demand, it

implies customers will do a great deal of correlation shopping.

They ordinarily do this when they aren't edgy to have it or they needn't
bother with it consistently. They'll additionally examination shop when
there are a ton of other comparable decisions.

beyond prices, the elasticity of a decent or administration

straightforwardly influences the client or consumers degrees of
consistency of an organization. Organizations regularly endeavor to offer
products that have inelastic request; doing as such implies that clients will
stay steadfast and keep on purchasing the great or administration even
notwithstanding a cost increment.

So basically it's depends on two things , consumer priorities and

companies decision to choose either elastic or inelastic goods
An increase in prices for a primary product or we can call it daily use
It's can't affect our demand on it unless there is alternative good

Every economist should know and use the law of demand it's guides the
relationship between price and the quantity bought. It states that the
quantity purchased has an inverse relationship with price. When prices
rise, people buy less. The elasticity of demand tells you how much the
amount bought decreases when the price increases.
to be clear so we can differentiate between elastic and inelastic good

elastic : goods and services generally have plenty of substitutes. As an

elastic service/good's price increases, the quantity demanded of that good
can drop fast. Example of elastic goods and services include furniture,
motor vehicles, instrument engineering products, professional services,
and transportation services.

Inelastic : goods have fewer substitutes and price change doesn't affect
quantity demanded as much. Some inelastic goods include gas, electricity,
water, drinks, clothing, tobacco, food, and oil.

Applications of elasticity :

1- Petrol : oil has couple of options since individuals with an auto need to
purchase petroleum. For some, driving is a need. There are feeble
substitutes, for example, prepare, strolling and the transport. Be that as it
may, for the most part, if the cost of petroleum goes up, request
demonstrates extremely inelastic.

2- Diamonds : Bought very infrequently, diamonds are the ultimate

luxury with few exact alternatives. You could buy other precious gems,
but others may not have the same allure as diamonds. A cut in price
wouldn’t increase demand very much.

3- A good produced by a monopoly : Any good created by a monopoly is

probably going to be inelastic request. For instance, if Sky increment the
cost of prevalence pay per view, numerous football fans will pay the
additional cost. In spite of the fact that since it isn't a need, request might
be less inelastic than say petroleum.

4- Tap water. For householders, tap water is a necessity with no

alternatives. If the water company increase the cost of water bills, people
would keep buying the service. It would have to rise to a very high price
before people disconnected their water supply. This is why tap water is
regulated by the government.
Methodology : after reading the previous information and after finishing
this research the reader will be able to understand how does the economics
system works and its main purpose and always make a quick search on the
wanted product to study the most appropriate way to get it in the highest
quality and the lowest cost .

Results and Recommendation : it will end up that consumers they could

be a price maker but it depends on the products its self and the consumers
way of thinking and purchasing techniques and the agreement and unity of
the decision , also have a general image about economics and its purpose
and the different between elastic products and inelastic and elasticity in
general
References :
/https://www.economicshelp.org
/https://www.investopedia.com
www.google.com
My own information or ideas that i learned it from the lectures.