Merchanting is the activity of buying items at a low price and selling them higher later. If done properly, the merchanter can make substantial amounts of profit. Given factors such as the non-production of items in the process and an apparent increase in price volatility, this kind of business is often stigmatised.
However, merchanting may serve a useful role in the economy. Such activity can actually help to keep prices more stable and, as a bonus, the merchanter will be rewarded for it.
Elastic supply and demand
Price elasticity is how much the quantity of an item in the market changes with a given change in price. The more elastic the price, the more quantity will change with a given price change. There are two types of elasticity: