Question

What is elasticity of demand and supply in economics?

Answer 1

In economics, the demand elasticity (elasticity of demand) refers to how sensitive the demand for a good is to changes in other economic variables, such as prices and consumer income. Demand elasticity is calculated as the percent change in the quantity demanded divided by a percent change in another economic variable. A higher demand elasticity for an economic variable means that consumers are more responsive to changes in this variable.

Supply refers to the amount of a good or service that the producers/providers are willing and able to offer to the market at various prices during a period of time.