The concept of elasticity

Elasticity measures how much the quantity of a good or service changes in response to a change in price or other factors. For example, if the price of a product drops significantly, and people buy much more of it, the product is considered elastic. Conversely, if a price change has little impact on the quantity purchased, the product is inelastic. It reflects how sensitive consumers or producers are to changes, helping businesses and policymakers understand market behavior and make informed decisions.