What Are Three Core Rules Of Elasticity?


2 Answers

Aisha Profile
Aisha answered
The degree to which a demand or supply curve reacts to a change in the price curve is called elasticity. Elasticity varies among different products because some products may be more essential to the consumer. The three general rules of elasticity are:
1. The availability of substitutes
2. Amount of income available to spend on the goods
3. Time
Rana Shahid Profile
Rana Shahid answered
Slope and elasticity of demand have an inverse relationship. When slope is high elasticity of
demand is low and vice versa.
When the slope of a demand curve is infinity, elasticity is zero (perfectly inelastic demand);
and when the slope of a demand curve is zero, elasticity is infinite (perfectly elastic demand).
Unit elasticity means that a 1% change in price will result in an exact 1% change in quantity
demanded. Thus elasticity will be equal to one. A unit elastic demand curve plots as a
rectangular hyperbola. Note that a straight line demand curve cannot have unit elasticity as the
value of elasticity changes along the straight line demand curve.

Answer Question