Answer to Question #61703 in Other Economics for Karen
Why is elasticity an important concept for a business?
Elasticity is the measurement of how responsive an economic variable is to a change in another. It gives answers to questions such as: • "If I lower the price of a product, how much more will sell?" • "If I raise the price of one good, how will that affect sales of this other good?" • "If the market price of a product goes down, how much will that affect the amount that firms will be willing to supply to the market?".
Knowing the concept of elasticity it is possible to react to the shifts on the market with minimal income losses or an increase of an income.