Answer - Elasticity is the mathematical concept. Suppose there are two variables X and Y. Variable 'X' is a dependent variable and variable 'Y' is an independent variable.
The elasticity measures the responsiveness of the dependent variable with respect to the change in independent variable. By using the elasticity concept we can find how demand will change in price change. Elasticity will give us quantitative value of change in dependent variable.
The concept of elasticity is very important in microeconomics because microeconomics deal with single units. The microeconomics deals with study of individual consumer, firm, factor of production, market, etc. We use different type of elasticity in microeconomics. We use, price elasticity of demand, price elasticity of supply, interest elasticity, production elasticity, cost elasticity etc.
Get Answers For Free
Most questions answered within 1 hours.