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# Elasticity of Demand The elasticity of demand is how sensitive the quantity demanded for a good is to changes in price. For example, if the price of a product increases, people might buy less of it. This is known as an **elastic demand**. Here are some factors that can affect the elasticity of d...

# Elasticity of Demand The elasticity of demand is how sensitive the quantity demanded for a good is to changes in price. For example, if the price of a product increases, people might buy less of it. This is known as an **elastic demand**. Here are some factors that can affect the elasticity of demand: - **Possibility of postponement of consumption:** The demand for a good is more elastic if its consumption can be postponed. For example, the demand for a product that needs to be purchased immediately (such as medicine) is inelastic, as its consumption can't be delayed. The demand for a good that can be postponed (such as diet) is elastic. - **Durability of the commodity:** The elasticity of demand for a durable good (a good that lasts a long time) is different from the elasticity of demand for a nondurable good. Durable goods have an elastic demand in the long term, while nondurable goods have a more inelastic demand in the short term. For example, a car is a durable good, and its demand will be more elastic in the long term, because people have more time to choose a car that fits within their budget. On the other hand, a food like bread is a nondurable good, and people will need to purchase it regardless of the price, as it cannot be postponed. - **Habits:** When people are used to consuming a certain product, they become accustomed to it, and the demand becomes inelastic. This is especially true for goods that are considered addictive, such as cigarettes or alcohol. - **Price range:** When prices are very high or very low, the elasticity of demand tends to be low. When prices are very high, people are likely to buy less regardless of the price, as they can't afford to buy very much of the product. When prices are very low, they are likely to buy a lot of the product regardless of the price, as it is affordable. The **price elasticity of demand** can be measured by different methods, but it is usually calculated as the ratio of the percentage change in quantity demanded to the percentage change in price.