Elasticity is an economic term that describes the responsiveness of one variable to changes in another. It commonly refers to how demand changes in response to price.

In business and economics, elasticity is usually used to describe how much demand for a product changes as its price increases or decreases. This is referred to as price elasticity of demand.

Understanding the difference between elasticity and inelasticity of demand can help you identify better investments.

Business Examples of Income Elasticity. A business' demand for a good is based on the price of the good. When prices rise, the business will buy less of the good.

Economists use elasticity of demand to gauge how responsive consumers are to changes in price and income, but investors can also use elasticity of demand to help make more informed investing ...

Perfect price elasticity is when demand moves infinitely given a price change, with an example being two producers of a commodity selling them side by side.

For example, if the price of a name-brand microwave increases 20% and consumer purchases of this product subsequently drop by 25%, the microwave has a price elasticity of demand of 25% divided by ...

All you need to know about demand elasticity and how it fluctuates based on changing variables.

The availability of substitutes will make the demand more elastic. If the price of pork rises, for example, customers will buy less pork and more chicken. Finally, time determines elasticity.

When a price rises sharply, business leaders must estimate how long it will take for increased supply and reduced demand to nudge prices back down.