THE VARIOUS TYPES OF ELASCTICITY

Elasticity is the concept in economics that measures the responsiveness of one variable in response to another variable. The best measure of this responsiveness is the proportional or percent change in the variables. This gives the most usable results for any type or range of data. Thus, elasticity is the proportional (or percent) change in one variable relative to the proportional change in another variable.
The general formula for elasticity is:
E = Percent change in x
Percent change in y

An important characteristic of demand is the relationship among market price, quantity demand and consumer expenditure. The nature of demand is such that a reduction in market price will usually lead to an increase in quantity demanded. Given that consumer expenditure is the product of these two variables, the effect of a price reduction will have an uncertain impact on this expenditure. In some cases a reduction in price will be more than offset by a large increase in quantity dem...