verðteyjanleika

Verðteyjanleika, a term of Icelandic origin, translates to price elasticity in English. It is a fundamental concept in economics that measures how sensitive the quantity demanded or supplied of a good or service is to a change in its price. Specifically, it quantifies the responsiveness of consumers' purchasing habits or producers' supply decisions to price fluctuations.

There are different types of verðteyjanleika. Demand elasticity refers to how much the quantity demanded changes in response to a price change. If demand is elastic, a small price change leads to a large change in quantity demanded. If demand is inelastic, a price change results in a proportionally smaller change in quantity demanded. Supply elasticity, on the other hand, measures how much the quantity supplied changes in response to a price change.

Factors influencing verðteyjanleika include the availability of substitutes, the necessity of the good, the proportion of income spent on the good, and the time horizon. For instance, goods with many close substitutes, like different brands of coffee, tend to have more elastic demand. Conversely, necessities like essential medicines often have inelastic demand. Understanding verðteyjanleika is crucial for businesses when setting prices and for governments when considering taxation policies, as it helps predict the impact of price changes on markets and consumer behavior.