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Economics vocabulary · Markets, Supply and Demand

Elasticity

Meaning in economics, with examples

/ˌiːlæˈstɪsəti/nounCommon term

In economics, elasticity means: A measure of how strongly the quantity demanded or supplied responds to a change in price, income or another factor.

In Turkish: esneklik

How it is used

Most often price elasticity of demand: the percentage change in quantity divided by the percentage change in price. Demand is elastic when buyers react strongly (luxury goods) and inelastic when they hardly react (bread, fuel, medicine). There is also income elasticity and cross elasticity.

Example sentences

  1. The price elasticity of demand for cigarettes is low, so a tax rise reduces smoking only a little.

  2. Calculate the elasticity of demand if a 10% price rise cuts sales by 20%.

Common collocations

  • price elasticity of demand
  • income elasticity
  • low elasticity
  • elasticity of supply
  • demandThe amount of a good or service that buyers are willing and able to purchase at each possible price during a given period.
  • supplyThe amount of a good or service that producers are willing and able to sell at each possible price during a given period.
  • microeconomicsThe branch of economics that studies how individual households and firms make choices, and how prices are set in particular markets.
  • taxationThe system by which a government collects money from people and businesses through taxes on income, profits, spending and property.

More terms: Markets, Supply and Demand

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This page explains English vocabulary for learners. It is not financial advice.