GLOSSARY

ELASTICITY

10 May 2016 By PDSNET

1. The ability to recover an original configuration.
   
   
2. The elasticity of demand or supply refers to the degree to which demand or supply responds to changes in price. For example, some products (such as salt or maize meal) are very price sensitive because there is not much room for beneficiation and because the industry is competitive. Other products, like luxury motor cars are relatively insensitive to price changes. The degree of competition within an industry has a major impact on price sensitivity. Monopolies are traditionally price insensitive while highly competitive industries are very price sensitive. Most manufacturers try to give their product an "edge" by stimulating brand awareness because this enables them to add a premium to the price.

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