Kysynnänjousto

Kysynnänjousto, or price elasticity of demand, is an economic concept that measures how the quantity demanded of a good or service responds to a change in its price. It essentially indicates the sensitivity of consumers to price fluctuations. If the quantity demanded changes significantly in response to a small price change, the demand is considered elastic. Conversely, if the quantity demanded changes very little despite a notable price alteration, the demand is deemed inelastic.

Several factors influence kysynnänjousto. The availability of substitutes is a key determinant. If many close substitutes exist for a product, consumers can easily switch to alternatives if the price rises, making the demand more elastic. Conversely, goods with few or no substitutes tend to have inelastic demand. The proportion of income spent on a good also plays a role; goods that represent a large portion of a consumer's budget are typically more price elastic than those that constitute a small portion. The time horizon considered also matters; demand tends to become more elastic over longer periods as consumers have more time to adjust their purchasing habits and find alternatives.

Understanding kysynnänjousto is crucial for businesses when setting prices and for policymakers when considering taxes or subsidies. For instance, a company selling a product with highly elastic demand might be hesitant to raise prices, fearing a substantial drop in sales. Similarly, governments might impose higher taxes on goods with inelastic demand, such as essential medicines, as the impact on consumption is likely to be less pronounced.