elasticity
ee-la-STIS-i-tee
/ˌiːlæˈstɪsəti/
The degree to which supply or demand for a good changes in response to changes in price or income.
Measures market responsiveness or sensitivity to price modifications.
The story behind the word. Borrowed from Greek 'elastikos' ('propelling' or 'pliant'). British economist Alfred Marshall adapted this physical property of rubber bands into economic theory during the late 19th century to describe how consumer buying patterns stretched or snapped back when prices altered.
Word relationships
- responsiveness: A broad descriptive term, whereas elasticity is a mathematically calculated economic metric.
- flexibility: Refers to general adaptability rather than exact ratio of price sensitivity.
- inelasticity: Unresponsiveness of demand or supply to price adjustments.
- rigidity: Complete lack of change or response under external force.
Commonly confused with
- plasticity: Plasticity implies permanent reshaping, while elasticity implies returning or responding dynamically.
Word family
- elastic (adjective): Responsive to changes in price or condition.
- inelastic (adjective): Unresponsive to changes in price or condition.
Collocations
- price elasticity
- elasticity of demand
- income elasticity
- high elasticity
Example sentences
- "Luxury items typically exhibit high price elasticity of demand because buyers easily skip purchases when prices rise." Microeconomics
- "Governments often tax products with low demand elasticity, like gasoline, to ensure stable tax revenues." Taxation Policy
Memory hook
ELASTIC stretches easily — just like elastic demand stretches when price changes. Stretching demand when prices change.
When not to use
Do not confuse physical elasticity (stretching rubber) with economic price sensitivity unless drawing an explicit structural metaphor.
Fun facts
- Life-saving medications have near-zero elasticity of demand because buyers must purchase them regardless of price spikes.
Related words
Explore more words
mobility, flexibility, resilience, flexible, volatility, Affordability
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