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How are the elasticities of supply and demand similar?
How do they differ?

User Jpduro
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2 Answers

3 votes

Answer/Explanation:

The elasticity of Demand and Supply is regarded as the degree of responsiveness to the changes in the demand or supply of goods and services, influenced mainly by the increase or decrease in the price of the goods and services.

The law of demand states that 'all things being equal, the higher the price, the lower the quantity of goods demanded; while the lower the price, the higher the quantity of goods demanded'.

Conversely, the law of supply states that 'all things being equal, the higher the price, the higher the quantity of goods supplied, while the lower the price, the lower the quantity of goods supplied'.

These two concepts of Elasticity of Demand and Elasticity of Supply share some similarities as well as differences. The main similarity between the elasticity of demand and supply is:

1. Both concepts are interconnected, in that they both focus on how the change in the price of commodity affects the responsiveness of demand or supply the commodity.

Some of the differences between the elasticity of demand and supply include:

1. The two concepts respond differently to changes (increase/decrease) in price, for instance, while demand decreases as price increases, supply increases as price increases.

2. Also, while the concept of elasticity of demand focuses specifically on the effect of price on demand, the concept of elasticity of supply focus on how the change in price will affect supply.

User Cerniuk
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4 votes

Answer:

Elasticities of supply and demand are similar because they put into consideration how demand and supply is going to be affected by slightest changes in price.

They differ because demand elasticity put into consideration how demand will change price BUT supply elasticity consider how the supply will change price

Step-by-step explanation:

Elasticity of demand can be described as how the change in demand may result into the change in the price . It can me calculated using the formula which states that change in quantity % divided by change in price %

Elasticity of supply can be described as how price change can affect quantity to be supplied. The formula states that change in quantity supplied % DIVIDED by change in price

User Stack Guru
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