What is the Difference Between Elasticity of Demand and Elasticity of Supply?

The difference between elasticity of demand and elasticity of supply lies in their definitions, calculations, and the factors they measure. Here are the main differences:

1. Definition: Elasticity of demand measures the responsiveness of the quantity demanded of a good or service to a change in its price, while elasticity of supply measures the responsiveness of the quantity supplied of a good or service to a change in its price.
2. Calculation: Elasticity of demand is calculated as the percentage change in the quantity demanded divided by the percentage change in price. Elasticity of supply is calculated as the percentage change in quantity supplied divided by the percentage change in price.
3. Factors: Elasticity of demand reflects consumer behavior as a result of price changes, while elasticity of supply measures producer behavior in response to price changes.
4. Response to price changes: Demand tends to increase when price falls, and supply tends to fall when price falls. If the demand is elastic, a small increase in price will cause a large decrease in quantity, whereas if the supply is elastic, a small decrease in price will cause a large increase in quantity.

In summary, elasticity of demand and elasticity of supply are related but distinct concepts that measure the responsiveness of demand and supply to price changes, respectively. They are calculated differently and reflect consumer and producer behavior differently.

Comparative Table: Elasticity of Demand vs Elasticity of Supply

Here is a table comparing the differences between elasticity of demand and elasticity of supply:

Both elasticity of demand and elasticity of supply measure the responsiveness of quantity demanded or supplied to changes in price. However, they focus on different aspects of the market: consumer response (demand) and producer response (supply).