Elasticity Concepts

Elasticity measures how much one thing responds or changes when another thing changes. For example, if the price of a product goes up, and people buy much less of it, demand is elastic. If their buying habits stay mostly the same, demand is inelastic. It helps businesses and economists understand how sensitive people are to price changes, income shifts, or other factors, influencing decisions on pricing, production, and policy. Elasticity varies across different products and situations, indicating the degree of responsiveness in economic relationships.