Fixed Supply (Price Elasticity)

In the realm of economics, a fixed supply pertains to an asset whose total quantity remains unchanging and static. A prominent illustration is Bitcoin, with its predetermined supply of 21 million coins. In assets characterized by a fixed supply, price variations primarily hinge on shifts in demand. The concept of price elasticity is intertwined with the asset’s supply, measuring how the quantity demanded reacts to fluctuations in price. When an asset maintains a fixed supply, its price elasticity is commonly regarded as zero.