Understanding the theory of elasticity: The 4 kinds of elasticity

One of the topics that you cannot miss when you will study economics is about elasticity. This theory is very important as you can use it for your business. You should know how to use it if you want to understand the performance of your business. It is a theory that could be put into practice for it to be useful. You can understand about it in the infographic below. If it is lacking and you want to use it you can make your own research.

Here you can see the definition of elasticity and also the four kinds or types of it that you should understand. It is based on a dependent variable and so by that, you can see the changes. Elasticity rotates in the price and demand. You can be able to understand the relationship of demand to the price or the other way around. You will also encounter about the normal product and the inferior product. There is also the complementary good and a substitute product.

There is the guide of the graph on how you can understand the application of elasticity and also in the lowest part is the formula that you can use. There are two kinds of formula. One is the point formula and the other one is the arc formula. You can use them to calculate elasticity. When you have understood this theory and be able to apply it then you can understand more your business.