Elasticity

Elasticity is an economic measure of how responsive the quantity demanded or supplied of a good is to changes in one of its determinants, most commonly its price. Price elasticity of demand, for instance, measures how much the quantity demanded of a good changes in response to a change in price.

Goods with high elasticity see significant changes in quantity with small price changes (e.g., luxury goods), while inelastic goods show minimal response (e.g., necessities). Elasticity also extends to income and cross-price elasticity, which measure responsiveness to income changes and prices of related goods, respectively.