Elasticity (economics)

In economics, elasticity is the measurement of how responsive an economic variable is to a change in another. It gives answers to questions such as:

An elastic variable (with elasticity value greater than 1) is one which responds more than proportionally to changes in other variables. In contrast, an inelastic variable (with elasticity value less than 1) is one which changes less than proportionally in response to changes in other variables. A variable can have different values of its elasticity at different starting points: for example, the quantity of a good supplied by producers might be elastic at low prices but inelastic at higher prices, so that a rise from an initially low price might bring on a more-than-proportionate increase in quantity supplied while a rise from an initially high price might bring on a less-than-proportionate rise in quantity supplied.