The extent to which a supply or demand curve responds to a change in price is the elasticity curve, which can be different across products because some goods are more essential to people than others. When the product is a necessity, its price is considered more likely to change, because people will continue to buy it despite price increases. However, when the good or service is not considered necessary, a price increase will discourage people from purchasing it because the opportunity cost will become too high. A product or service is considered highly elastic if a minor change in its price results in a significant increase in its price. change in the quantity demanded or supplied. Meanwhile, an inelastic good or service is one in which price changes do not change or only slightly change the levels of supply and demand. To determine the elasticity of supply and demand, the simple equation is used: ELASTICITY = % CHANGE IN QUANTITY % CHANGE IN PRICE It is very important for businesses to collect information on the price elasticity of demand (PED) and price elasticity of supply (PED ). The company will gain in-depth knowledge of its internal operations and product costs as well as the external environment, helping to forecast sales, the impact of a change in its price and, among other things, the business plan. 'action. Additionally, elasticity can tell the company how competitive it is in the market, also allowing it to generate more revenue and profit. The PED shows the relationship between price and quantity demanded, providing an accurate calculation of the effect of a change in price. price or demand. The equation that calculates the PED is given as follows: PED = % CHANGE IN QUANTITY DEMANDED % CHANGE IN PRICE Suppose the price of the newspaper increases...... middle of paper ...... more than one , the price elasticity of supply is elastic; therefore, the company responds to price changes, giving it a competitive advantage over its competitors. Although the PES coefficient is positive, it can range from 0, perfectly inelastic, to infinity, perfectly elastic (Economics Online). In other words, there are three extreme cases of PSE:• Infinite supply at one price = Perfectly elastic;• Only one quantity can be supplied = Perfectly inelastic;• In the graph, this is the linear supply curve from the origin = Unit elasticityThe way companies wish to respond to changes in market conditions must be carefully analyzed, while the company must determine whether available resources are readily available, worker mobility, inventory availability, whether production is to its full capacity. as well as the production cycle.