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In economics, elasticity is a measure of how sensitive one economic factor is to changes in another. It can help economic agents understand how to improve economic outcomes.
Elasticity is important for businesses, finance, and government because it helps them determine how to proceed with policies and prices.
The three main types of elasticity are: Demand: The change in demand for a good based on its price Supply: The change in supply of a good based on its price and income Income: The change in demand with the change of consumers' incomes
A product is considered elastic if a change in price makes a big difference in either the supply or demand of the product. Some examples of elastic products include: Cupcakes, High-end cars, and Drinks. A product is considered inelastic if changing the price of the product doesn't change its supply or demand much, or at all. Some examples of inelastic products include: Gasoline and iPhones.
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