Price elasticity of demand refers to the sensitivity of market demand of commodities to price changes. Usually expressed by the percentage of demand change and price change, that is, the elasticity coefficient of demand price. The calculation formula is divided into point elasticity formula and arc elasticity formula. The main factors affecting the elasticity of product demand are: the importance of products to people's lives. Usually, the demand elasticity of daily necessities is small, and the demand elasticity of luxury goods is large. Goods substitution. The elasticity of demand for goods that are difficult to replace is small, and the elasticity of demand for goods that are easy to replace is large. Usage of products. The demand elasticity of single use is small, and the demand elasticity of wide use is large. The popularity of the product. The demand elasticity of products that have been popularized and saturated by society is small, and the demand elasticity of products with low popularity is large. Unit price of the product. The demand elasticity of daily necessities with small unit price is small, and the demand elasticity of high-end consumer goods with large unit price is large. Demand affects prices.
Supply price elasticity refers to the sensitivity of market commodity supply to price changes. It is usually expressed by the ratio of supply fluctuation range to price fluctuation range, that is, the elasticity coefficient of supply price. In real life, the operation scale of capital-intensive and technology-intensive industries is difficult to change, and the supply elasticity of their products is small, while the operation scale of labor-intensive industries is easy to change, and the supply elasticity of their products is large; Among agricultural products, the supply elasticity of products with long production cycle such as wood is small; The supply elasticity of vegetables with short production cycle is large; The supply elasticity of perishable, difficult-to-store or shelf-life products is small, while the supply elasticity of easy-to-store products is large.
Supply price elasticity refers to the degree of response of supply to price changes, that is, the percentage of increase or decrease of commodity supply when commodity prices rise or fall 1%. A measure of the response of the supply change rate to the commodity price change rate is equal to the supply change rate divided by the price change rate. The concept of elasticity is equally important to supply and demand. The elasticity of supply price is equal to the percentage of supply change divided by the percentage of price change. According to the supply curve, price and quantity change in the same direction, which reflects the need for higher prices to attract suppliers to provide greater sales. If the percentage of supply change is greater than the percentage of price change, then supply is relatively elastic; If the percentage of supply change is less than the percentage of price change, supply is relatively inelastic.