Of what use is the principle of elasticity to the government or the private sector in an economy?

Question

Of what use is the principle of elasticity to the government or the private sector in an economy?

Answer 1

Elasticity is the scale which is change cope with a minor decision.

For instance, if you raise down your price of 5% :

- In some sectors, you could sell more than 3% (low elasticity)

- In some others, 15%

Same idea with your cost.

You have to define your market with those values.