Elasticity of Demand and Supply by Paul A. Samuelson

Elasticity of demand and supply, as explained by Paul A. Samuelson, measures how responsive consumers and producers are to changes in price. When demand is elastic, a small price change causes a significant shift in quantity demanded; conversely, inelastic demand means quantity demanded changes little with price shifts. Supply elasticity works similarly: elastic supply means producers react strongly to price changes, while inelastic supply indicates limited response. Understanding elasticity helps businesses and policymakers predict how market changes affect consumption and production, guiding decisions on pricing and resource allocation.