Can You Calculate The Four Types Of Elasticities By Taking The Examples?

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amber Jhon Profile
amber Jhon answered
There are four major types of elasticities including; demand, supply, income and cross elasticity. I am giving you some examples of each type of elasticity which are as follows: (Note: Mathematical calculations are not possible because elasticity models are very complex).

Elasticity of demand: Fuel shows low demand elasticity therefore, in order to change the consumption of fuel, there should be a dramatic change in the price of fuel. This means that if you calculate elasticity of demand of fuel with a small change in price then demand elasticity will be low.

Elasticity of supply: Elasticity of supply is low in the case of agricultural products especially when there are droughts. If you calculate price elasticity of supply then for an empty restaurant it will be high.

Elasticity of Income: For some services and products when income increases then the demand of the specific product or service decreases for example, bus service has a low income elasticity of demand. For the luxury product if you calculate income elasticity then it will be high.

Cross Elasticity of demand: It is negative when two products  are complements and increase in the price of one lowers the demand of the other for example, fuel and cars.
thanked the writer.
Oddman
Oddman commented
Can you explain your restaurant example? I've not known a restaurant to reduce prices just because it was empty.
amber Jhon
amber Jhon commented
It means that if the sales of a restaurants are not enough then obviously the restaurant can go for decrease in the prices of the menu. I hope you got it now.

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