Elasticity (economics)

"Inelastic" redirects here. For the physical property, see Elasticity (physics). For the computing system resource term, see Elasticity (system resource).
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In economics, elasticity measures the responsiveness of one economic variable to a change in another.[1] For example, if the price elasticity of the demand of a good is −2, then a 10% increase in price will cause the quantity demanded to fall by 20%. Elasticity in economics provides an understanding of changes in the behavior of the buyers and sellers with price changes. There are two types of elasticity for demand and supply, one is inelastic demand and supply and the other one is elastic demand and supply.[2]

  1. ^ Hayes, Adam (2022-07-05). "What Is Elasticity in Finance; How Does it Work (with Example)?". Investopedia. Retrieved 2023-03-31.
  2. ^ "Elasticity: What It Means in Economics, Formula, and Examples". Investopedia. Retrieved 2023-04-20.