THE DEMAND AND

SUPPLY ELASTICITY
QUIAMBAO, JESSICA
RUIZ, BIEN RYAN
ROSARIO, DJASHIA
• ELASTICITY – refers to the responsiveness or flexibility in the behavior of buyers
or sellers to price range.

• ELASTICITY OF DEMAND – The responsiveness of buyers/consumers/end

users

• ELASTICITY OF SUPPLY – The responsiveness of sellers/producers/suppliers

Types of Demand Elasticity
• ELASTIC DEMAND
a type of responsiveness of
consumers for their demand for luxury
goods like jewelry, cars, appliances,
as well as excellent or superior
services.
It is assumed that a slight
change in price of the luxury goods
result great effect on demand.
Types of Demand Elasticity
• INELASTIC DEMAND
This shows opposite situation
from elastic demand. This elasticity
illustrates the demand for basic
commodities especially food items and
other related basic necessities.
A great change in price of
food results to slight effect on demand.
Types of Demand Elasticity
• PERFECTLY ELASTIC DEMAND
One distinct property of
perfectly elastic demand is best
observed among buyers of raw
materials who are at the same time
sellers of the same raw materials or its
finished products. Hence, the
assumption in this type of elasticity
shows that the price is stagnant but it
has indefinite effect to demand.
Types of Demand Elasticity
• PERFECTLY INELASTIC DEMAND
A consumer’s behavior is absolute
because of the fact that there are actually
goods (e.g. pharmaceutical products)
and/or services (e.g. medical attention for
critical patient’s condition) could never be
evaded no matter what the worth of it or
the cost is.
The price is indefinitely changing
but the demand remains the same at a
pre-identified quantity.

Example:
Purchasing effective yet expensive
medicine or antidote for our love ones who
Types of Supply Elasticity
• ELASTIC SUPPLY
The responsiveness of the
producer/seller on the production of
industrial products in respect to price
range. Principle: a slight change in
price has a great effect to supply.
Profit is the driving force
Sellers of this type are industrialized as
they can respond immediately to the
demands of buyers/consumers
Types of Supply Elasticity
• INELASTIC SUPPLY
The responsiveness of producers on
agricultural products in respect to price
change. The underlying assumption is that
a great change in price results to slight
effect on supply.
It is commonly observed that
agriculture-based countries hardly cope
with the demand of domestic and
international markets aside from their
heavy dependence on labor-intensive
production, farmers are too dependent to
natural climatic and environmental
conditions.
There is production gap and pace
between agricultural and industrial
producers
Types of Supply Elasticity
• PERFECTLY ELASTIC SUPPLY
is the flexibility of the training
and educational institutions which
continuously produce the country’s
human resources of different
professions. The underlying assumption
is that no change in price but the
supply is indefinitely changing.
Types of Supply Elasticity
• PERFECTLY INELASTIC SUPPLY
A type of flexibility that is
prominent in the behavior among
producers of colossal or huge industrial
units vis-à-vis price change.
The underlying assumption is
that there is indefinite change in price
but the supply does not change.

• This explains the condition that

despite skyrocketing demand for the
said units, some large scale
manufacturing plants or firms stick
with set quantity limit for their
production in a year or on certain