The concepts of elastic and inelastic demand are used in economics to describe change processes, and the differences between the terms are defined by the amount of change occurring within a given system. Areas of economic study related to supply and demand utilize these concepts.Continue Reading
Elastic demand means that the amount or quantity of a certain product changes in large measure when the price of the product changes, particularly when the percentage of change in the quantity of the product being demanded is greater than the change in price. Inelastic demand means that the amount or quantity of a certain product changes in small measure when the price of the product changes, particularly when the percentage of change in the quantity of product being demanded is less than the change in price. Elasticity and inelasticity relate to the magnitude of change within the system.
Elastic and inelastic demand are measured as the percentage of change in the demand for something divided by the percentage of change in price. Similarly, elastic and inelastic supply are measured as a percentage of change in the supply of something divided by the percentage of change in price. Elasticities are recorded as negative numbers, since demand curves are always negative sloping.Learn more about Economics
Another term for "equilibrium price" in economics is "market-clearing price," which is a price point at which the market achieves a balance in terms of supply and demand. When the market reaches a market-clearing price, it does not generate a surplus or shortage.Full Answer >
Adam Smith's main contributions to the field of economics were to lay the conceptual foundations for measuring a nation's wealth not by its gold or silver reserves but by its levels of production, and also to champion free-market capitalism as the most effective economic system. Smith was very much in favor of a laissez-faire approach to economies, wherein governments intervene as little as possible in business practices and trade.Full Answer >
Karl Marx's primary contribution to economics was a new framework that described economics as a struggle for power between different classes. His critiques of capitalism have been accepted by many economic theorists. His work has also spawned countless debates.Full Answer >
In economics, double counting is defined as including the same costs or benefits more than once in the belief that different measures are involved. Double counting inflates expenditure or income since the final figure is considerably more than what was spent or earned.Full Answer >