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Define elasticity

Define elasticity
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Answer #1

Elasticity

Elasticity measures the responsiveness of an economic variable because of change in another economic variable.

For instance,

Price elasticity of demand measures the responsiveness of quantity demanded of a good for a particular percentage change in price of that good.

In other words, if price elasticity of demand is 3 then this indicates that quantity demanded will change (increase or decrease) by 3% for every 1% change in price (decrease or increase).

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