What does the term elastic describe in business?

Economics Dec 17, 2020

Expert Solution

Elastic in business refers to the sensitivity or responsiveness of the demand of a product or service whenever there are changes in the following: price of the good, price of related good or income of the consumers.

The most common measure is the price elasticity of demand. It's where the responsiveness is measured by changes in the price of the product itself.

A product is said to be elastic if a change in the price of the good would result in a decrease in the demand. On the other hand, an inelastic product means that a change in the price of the good does not really affect the demand and may even increase it.

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