How does elasticity affect businesses and governments? And What are the implications?

Question

How does elasticity affect businesses and governments? And What are the implications?

Answer 1

Read your text book and use the brain that you have to discover the answer.

Answer 2

your question is a little bit too broad for me to help a lot.  If you can give us more information, you might get a better response.

Generally speaking, I would say that products or services with high elasticity of demand with respect to price probably make the businesses that manufacture or sell them more agile.  They would have to be able to shift to other products or services if the inputs to production went up in price such that people switched to substitute products or services.   The government might not be especially closely involved if the same company, or other companies in the same country produce the substitute products or services.  But if the substitute products could not be produced in that same country, the government might want to be involved in policies that help protect the businesses from unexpected or especially sharp changes in input prices

For products and services with low elasticity of demand with respect to price, there is less risk to both the business and the government, in terms of revenue as the business can pass along price increases when the cost of inputs rise.