ESPA 4221-4321 PENGANTAR EKONOMI MIKRO - Elastisitas Permintaan dan Penawaran

Introduction

This tutorial provides a comprehensive overview of the concepts of demand and supply elasticity, as discussed in the video "ESPA 4221-4321 PENGANTAR EKONOMI MIKRO - Elastisitas Permintaan dan Penawaran." Understanding these concepts is crucial for analyzing how consumers and producers respond to changes in price, which can significantly impact market dynamics.

Step 1: Understanding Demand Elasticity

• Definition: Demand elasticity measures how much the quantity demanded of a good responds to a change in its price.

• Types of Demand Elasticity:

  • Elastic Demand: A small price change leads to a large change in quantity demanded (elasticity > 1).
  • Inelastic Demand: A price change leads to a small change in quantity demanded (elasticity < 1).
  • Unitary Elastic Demand: A price change does not affect total revenue (elasticity = 1).

• Calculation:

  • Use the formula:

    Elasticity of Demand (E_d) = % Change in Quantity Demanded / % Change in Price
    

• Practical Example: Consider a luxury item. A 10% increase in price may result in a 20% drop in demand, indicating elastic demand.

Step 2: Understanding Supply Elasticity

• Definition: Supply elasticity measures how much the quantity supplied of a good responds to a change in its price.

• Types of Supply Elasticity:

  • Elastic Supply: A small price change leads to a large change in quantity supplied (elasticity > 1).
  • Inelastic Supply: A price change results in a small change in quantity supplied (elasticity < 1).
  • Unitary Elastic Supply: A price change does not affect total revenue (elasticity = 1).

• Calculation:

  • Use the formula:

    Elasticity of Supply (E_s) = % Change in Quantity Supplied / % Change in Price
    

• Practical Example: If the price of a crop increases by 15% and the supply increases by 30%, the supply is elastic.

Step 3: Factors Affecting Elasticity

• For Demand:

  • Availability of substitutes: More substitutes mean more elastic demand.
  • Necessity vs luxury: Necessities tend to have inelastic demand.
  • Time period: Demand can become more elastic over time.

• For Supply:

  • Production flexibility: Goods that can be produced quickly have more elastic supply.
  • Time frame: Supply is generally more elastic in the long run.

Step 4: Real-World Applications of Elasticity

• Pricing Strategies: Businesses can adjust prices based on the elasticity of their products to maximize revenue.
• Taxation Policy: Understanding elasticity helps governments predict the impact of taxes on different goods.
• Market Predictions: Economists use elasticity to forecast changes in demand and supply in response to economic shifts.

Conclusion

Understanding demand and supply elasticity is vital for making informed business decisions and economic policies. By analyzing how quantity demanded or supplied changes with price, stakeholders can better navigate market dynamics. Consider exploring specific case studies that illustrate these concepts in action for deeper insights.