Answer to Question #156721 in Microeconomics for aqib

Question

what is elasticity

Answer 1

In economics the elasticity is the measurement of the percentage change of one economic variable in response to a change in another. There are several examples of using the notion of elasticity in economics: price elasticity of supply and price elasticity of demand. For example, the price elasticity for demand for the product is a sensitivity of consumers to a price change. For some products like meat the small change in price causes a great change in the quantity purchased. Therefore, we can say that the demand for the meat is elastic. If the large change in price causes small change in the quantity purchases (bread, for example), the demand is inelastic.