Question
Here is the question : HOW MUCH A CONSUMER REACTS TO A PRICE CHANGE IS KNOWN AS WHAT?
Option
Here is the option for the question :
- Margin price
- Elasticity
- Scarcity
- Equilibrium
The Answer:
And, the answer for the the question is :
Explanation:
How much consumers are affected by a change in price depends on a product’s elasticity. Insulin is an example of a price-inelastic good since consumers are willing to pay any amount for it. Some items, however, have a lot of price elasticity, like getting a massage or going to the movies, and can be easily foregone if the price increases too much. Price gouging occurs when retailers take advantage of consumers’ desperation and charge exorbitant rates for necessities in markets with high levels of inelasticity.
Elasticity is a concept in economics that refers to the degree to which a consumer or market responds to a change in price. Specifically, elasticity measures how much the quantity demanded or supplied of a good or service changes in response to a change in price.
Elasticity is an important concept in economics because it helps businesses and policymakers understand how consumers will react to changes in price. For example, if the price of a good or service increases, businesses can use the concept of elasticity to estimate how much the quantity demanded will decrease. This can help businesses make decisions about pricing strategies, production levels, and marketing campaigns.
There are two main types of elasticity: price elasticity of demand and price elasticity of supply. Price elasticity of demand measures the responsiveness of quantity demanded to a change in price, while price elasticity of supply measures the responsiveness of quantity supplied to a change in price.
If the price elasticity of demand is high, it means that consumers are very sensitive to changes in price, and a small change in price can lead to a large change in quantity demanded. In this case, businesses may need to be careful when raising prices, as consumers may quickly switch to a substitute product or service. On the other hand, if the price elasticity of demand is low, it means that consumers are not very sensitive to changes in price, and a change in price may have little effect on quantity demanded.
Similarly, if the price elasticity of supply is high, it means that producers are very sensitive to changes in price, and a small change in price can lead to a large change in quantity supplied. In this case, businesses may need to be careful when lowering prices, as producers may quickly reduce production or switch to producing a different product or service. On the other hand, if the price elasticity of supply is low, it means that producers are not very sensitive to changes in price, and a change in price may have little effect on quantity supplied.
elasticity is a concept in economics that measures the degree to which a consumer or market responds to a change in price. Price elasticity of demand and price elasticity of supply are two main types of elasticity that measure the responsiveness of quantity demanded or supplied to a change in price. Understanding elasticity is important for businesses and policymakers who need to make decisions about pricing, production, and marketing strategies.