Elasticity is a measure of the sensitivity of supply and demand to changes in factors that define them, primarily to a change in the value of the goods. (Mankiw, 2009) In quantitative terms, the elasticity means the degree or measure the response in one variable to the result of a one percent change in another variable value. The most important role in the elasticity of supply and demand plays a varying demand that depends on the prices.
The main factors influencing price elasticity of demand are:
Availability of high-quality interchangeable goods and the price level on them (the more substitutes and the lower the prices are, the more ...
