Law of demand dictates when the price of certain goods and services goes up, quantity demanded for that particular product goes down. But the question is, how much will it go down? This is what elasticity is all about. It tells us how much changes in quantity demanded when there’s a change in price.
Basically, there’s 5 types of elasticities.
First is elastic demand. When there’s a small changes in price, it will create a big changes in quantity demanded.
Second is Inelastic demand. When there’s a big changes in price, it will create a small changes in quantity demanded.
Third is unitary elastic. If there’s a changes in price, it will create an equal amount of changes in quantity demanded.
Fourth is perfectly elastic demand. When there’s a price increase, the quantity demanded can be reduced to 0. Alternately, when the price decrease, quantity can increase up to infinity. In other words, quantity demanded is ridiculously sensitive to price change.
Last but not least, perfectly inelastic demand. When there’s a price changes, quantity demanded remained unchanged.
Same term applied for supply. Hope this helps, let me know what you think.
There are many factors determine the elasticities of a goods and services as explained here, but in this example, we use the number of substitute goods as the primary factor while assuming the other factors to be constant.
Basically, the more substitute goods there is for one particular item, the more elastic it become. This is why for elastic demand, a tiny price change can result in enormous amount of changes in the quantity demanded, because consumers can easily substitute to another goods. A hike in the price of oranges, causes an increase of quantity demanded for apples, grapes, or pears.
Conversely, a certain goods become inelastic if the number of substitute goods is limited. A fine example would be petroleum for cars. As the price of petrol increases, the quantity demanded doesn’t decrease all that much. This is because there are very few good substitutes for petrol and consumers are still willing to buy it even at relatively high prices.
Next is perfectly inelastic demand. A product become perfectly inelastic when there are extremely few or no substitute at all. This often associated with important medications such as insulin for diabetic patient. As there is no viable substitute for insulin, the quantity demanded remained unchanged for any given price; let it be high or low.
Last but not least, perfectly elastic demand. This is an extreme case whereby, a small reduction in price can result an increase in quantity demanded up to infinity. On the contrary, a tiny increase in price can reduce the quantity demanded down to 0. This type of goods is very very sensitive to price change. Finding exact examples would be difficult in real life, but close example can be thought of. For example, in a perfectly competitive market, where the goods are a perfect substitute to one another and the price is determined by the market, every fruit vendors have to keep an almost same price to get the demand; if any of them would increase their price people would tend to move to another vendor. So such vendor faces a perfectly elastic demand curve.
Permintaan buruh (DL) berhubungan negatif diantara tingkat upah (W) dengan kuantiti buruh (L). Ini bermaksud, sebarang tambahan buruh hanya dapat dilakukan jika tingkat upah dikurangkan. Namun, magnitud pengurangan tingkat upah itu bergantung kepada jenis keanjalan buruh itu. Secara amnya, buruh dapat dikategorikan kepada dua jenis iaitu, buruh mahir dan buruh tak mahir.
Buruh mahir terdiri daripada golongan professional seperti doktor, jurutera dan peguam; dimana memerlukan pendidikan yang tinggi serta masa yang lama untuk dilatih. Sebab itu bayaran kepada buruh ini mahal dan jika firma ingin meningkatkan permintaan buruh mahir, mereka kena kurangkan tingkat upah pada kadar yang besar. Namun, bilangan yang meningkat hanya sedikit sahaja. Maka, buruh mahir dikatakan mempunyai keluk permintaan tak anjal.
Ini bermaksud, peratus perubahan tingkat upah (W) melebihi peratus perubahan kuantiti permintaan buruh (DL).
Buruh tak mahir pula adalah buruh yang tidak mempunyai sebarang latihan yang khusus atau tahap kualifikasi yang tinggi. Bilangan jenis buruh ini melebihi buruh mahir. Jika firma ingin meningkatkan bilangan buruh, mereka hanya perlu mengurangkan tingkat upah pada kadar yang sedikit sahaja. Maka, buruh tak mahir dikatakan mempunyai keluk permintaan anjal.
Ini bermaksud, peratus perubahan tingkat upah (W) kurang daripada peratus perubahan kuantiti permintaan buruh (DL).
Nash Notes 
Thank you so much this really helps! :D
Maybe u can teach me more about this topic? Can?
Sure thing :)
Law of demand dictates when the price of certain goods and services goes up, quantity demanded for that particular product goes down. But the question is, how much will it go down? This is what elasticity is all about. It tells us how much changes in quantity demanded when there’s a change in price.
Basically, there’s 5 types of elasticities.
First is elastic demand. When there’s a small changes in price, it will create a big changes in quantity demanded.
Second is Inelastic demand. When there’s a big changes in price, it will create a small changes in quantity demanded.
Third is unitary elastic. If there’s a changes in price, it will create an equal amount of changes in quantity demanded.
Fourth is perfectly elastic demand. When there’s a price increase, the quantity demanded can be reduced to 0. Alternately, when the price decrease, quantity can increase up to infinity. In other words, quantity demanded is ridiculously sensitive to price change.
Last but not least, perfectly inelastic demand. When there’s a price changes, quantity demanded remained unchanged.
Same term applied for supply. Hope this helps, let me know what you think.
Can you give example and the reason for the example?
There are many factors determine the elasticities of a goods and services as explained here, but in this example, we use the number of substitute goods as the primary factor while assuming the other factors to be constant.
Basically, the more substitute goods there is for one particular item, the more elastic it become. This is why for elastic demand, a tiny price change can result in enormous amount of changes in the quantity demanded, because consumers can easily substitute to another goods. A hike in the price of oranges, causes an increase of quantity demanded for apples, grapes, or pears.
Conversely, a certain goods become inelastic if the number of substitute goods is limited. A fine example would be petroleum for cars. As the price of petrol increases, the quantity demanded doesn’t decrease all that much. This is because there are very few good substitutes for petrol and consumers are still willing to buy it even at relatively high prices.
Next is perfectly inelastic demand. A product become perfectly inelastic when there are extremely few or no substitute at all. This often associated with important medications such as insulin for diabetic patient. As there is no viable substitute for insulin, the quantity demanded remained unchanged for any given price; let it be high or low.
Last but not least, perfectly elastic demand. This is an extreme case whereby, a small reduction in price can result an increase in quantity demanded up to infinity. On the contrary, a tiny increase in price can reduce the quantity demanded down to 0. This type of goods is very very sensitive to price change. Finding exact examples would be difficult in real life, but close example can be thought of. For example, in a perfectly competitive market, where the goods are a perfect substitute to one another and the price is determined by the market, every fruit vendors have to keep an almost same price to get the demand; if any of them would increase their price people would tend to move to another vendor. So such vendor faces a perfectly elastic demand curve.
permintaan buruh mahir adalah kurang anjal daripada permintaan buruh tak mahir. Mengapa?. Boleh jelaskan?
Permintaan buruh (DL) berhubungan negatif diantara tingkat upah (W) dengan kuantiti buruh (L). Ini bermaksud, sebarang tambahan buruh hanya dapat dilakukan jika tingkat upah dikurangkan. Namun, magnitud pengurangan tingkat upah itu bergantung kepada jenis keanjalan buruh itu. Secara amnya, buruh dapat dikategorikan kepada dua jenis iaitu, buruh mahir dan buruh tak mahir.
Buruh mahir terdiri daripada golongan professional seperti doktor, jurutera dan peguam; dimana memerlukan pendidikan yang tinggi serta masa yang lama untuk dilatih. Sebab itu bayaran kepada buruh ini mahal dan jika firma ingin meningkatkan permintaan buruh mahir, mereka kena kurangkan tingkat upah pada kadar yang besar. Namun, bilangan yang meningkat hanya sedikit sahaja. Maka, buruh mahir dikatakan mempunyai keluk permintaan tak anjal.
Ini bermaksud, peratus perubahan tingkat upah (W) melebihi peratus perubahan kuantiti permintaan buruh (DL).
Buruh tak mahir pula adalah buruh yang tidak mempunyai sebarang latihan yang khusus atau tahap kualifikasi yang tinggi. Bilangan jenis buruh ini melebihi buruh mahir. Jika firma ingin meningkatkan bilangan buruh, mereka hanya perlu mengurangkan tingkat upah pada kadar yang sedikit sahaja. Maka, buruh tak mahir dikatakan mempunyai keluk permintaan anjal.
Ini bermaksud, peratus perubahan tingkat upah (W) kurang daripada peratus perubahan kuantiti permintaan buruh (DL).
thankyouu