Unit 2.5 · Elasticities of Demand
Concept of Elasticity
AO1AO4Diagram required
Syllabus Requirement
General concept describing responsiveness of one variable to changes in another, with focus on demand responsiveness.
Assessment Objectives
AO1Knowledge and Understanding
AO4Use of Appropriate Skills
Summary
Elasticity of demand measures how much the quantity demanded of a product changes in response to changes in factors like price or income. Understanding elasticity helps in analyzing consumer behavior and making pricing decisions, as it indicates whether demand is sensitive or insensitive to price changes.