Economics Supply And Demand Questions Medium
The difference between price elasticity of demand and price elasticity of supply lies in their focus and interpretation.
Price elasticity of demand measures the responsiveness of quantity demanded to a change in price. It quantifies the percentage change in quantity demanded resulting from a 1% change in price. It helps determine how sensitive consumers are to price changes and whether a good is considered elastic (responsive to price changes) or inelastic (less responsive to price changes). A high price elasticity of demand indicates that a small change in price leads to a significant change in quantity demanded, while a low price elasticity of demand suggests that quantity demanded remains relatively stable despite price fluctuations.
On the other hand, price elasticity of supply measures the responsiveness of quantity supplied to a change in price. It quantifies the percentage change in quantity supplied resulting from a 1% change in price. It helps determine how sensitive producers are to price changes and whether a good is considered elastic (responsive to price changes) or inelastic (less responsive to price changes). A high price elasticity of supply indicates that a small change in price leads to a significant change in quantity supplied, while a low price elasticity of supply suggests that quantity supplied remains relatively stable despite price fluctuations.
In summary, the key difference between price elasticity of demand and price elasticity of supply is that the former focuses on the responsiveness of quantity demanded to price changes from the consumer's perspective, while the latter focuses on the responsiveness of quantity supplied to price changes from the producer's perspective.