Elasticity

lasticity was another key topic I studied. Price elasticity of demand (PED) measures how much the quantity demanded of a good changes when its price changes. If a product has high elasticity, a small price change will lead to a large change in demand, like with luxury items. On the other hand, if a product has low elasticity, people will buy it even if the price goes up, like basic necessities such as bread or water.

I also learned about income elasticity of demand, which measures how changes in income affect the demand for goods. This concept is useful for businesses to predict how consumer spending might change with income growth. Elasticity helps explain why some products are sensitive to price changes while others are not.