elasticity formula

Elasticity measures how responsive one variable is to changes in another. In economics, for instance, it often looks at how the quantity demanded of a product changes when its price changes. The elasticity formula compares the percentage change in quantity demanded to the percentage change in price. If the result is greater than one, demand is considered elastic (sensitive to price changes); if less than one, it is inelastic (less sensitive). This concept helps businesses and policymakers understand consumer behavior and make informed decisions regarding pricing and production.