Question

Elasticity

Answer 1

[AI-generated answer — Bot GPT 3.5]

Elasticity refers to the responsiveness of a product or service to changes in price or income. In economics, elasticity measures the degree to which quantity demanded or supplied of a product changes in response to a change in price.

There are different types of elasticity, such as price elasticity of demand, price elasticity of supply, income elasticity, and cross-price elasticity. These measures help economists and businesses understand how consumers might react to changes in prices or incomes, and can inform decisions about pricing strategies, production levels, and market competition.

Elasticity is an important concept in economics as it helps to determine how sensitive consumers are to changes in prices and how this affects consumer behavior and market dynamics.