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Respond to the question: what is elasticity and the equation for?

03/04/2002 10:20 AM by name withheld; elasticity
Elasticity measures the change in quantity demanded when the price per quantity changes, i.e. if gas prices rise, at what rate does demand for gasoline fall? The equation is, I believe, as follows:
change in Quantity demanded(or supplied)/change in price
Demand or supply of a product is considered to be elastic if the demand (or supply) changes a great deal to a relatively small change in price, or has an elasticity greater than one. The opposite is also true; a product is considered to be inelastic if it has an elasticity of less than one. If a product has an elasticity of one, it has unitary elasticity, or is considered to be unit elastic. Hope that helps! [Manage messages]