What is Elasticity (economics)?
In [[economics]], people talk about '''elasticity''' of an economic variable, usually [[supply]] or [[demand]], in relation to another economic variable such as [[income]] or [[price]]. The elasticity of a variable is a measure of how much the variable changes in response to a change in a second variable. If the price for a good with a price-elastic demand goes up, the demand for it will go down. For example, people will buy fewer [[DVD]]s if DVDs get more expensive − DVDs have a price-elastic demand. If a good has a completely price-inelastic demand, the demand for it will not be affected by the price of it. For example, if the price of [[salt]] increases, people will not buy less of it. They need their daily salt intake. The demand of salt is therefore price-inelastic. Elasticity is often measured in percents. If a 2% increase in price causes people to buy 1% fewer of a product, it has a price elasticity of demand of -0.5. ==Related pages== *[[Price elasticity of demand]] {{Microeconomics-footer}} [[Category:Microeconomics]] {{stub}}