Elasticity
In economics, a measure of the responsiveness of one variable to a change in another, typically used to describe how quantity demanded or supplied responds to a change in price.
Elasticity quantifies sensitivity. High elasticity means a small change in price leads to a large change in quantity, while low (inelastic) elasticity means quantity changes little despite price shifts.
Word relationships
- responsiveness: 'Responsiveness' is a general term for how something reacts, while 'elasticity' is a specific, quantifiable economic measure of that reaction.
- sensitivity: Similar to responsiveness, 'sensitivity' is a broader concept; 'elasticity' provides a numerical value for this sensitivity in economic contexts.
- inelasticity: The state of being unresponsive or only slightly responsive to changes in price or other factors.
Commonly confused with
- flexibility: 'Flexibility' refers to the ability to adapt or bend, while 'elasticity' is a specific economic measure of proportional change.
Word family
- elastic (adjective): Able to return to its original shape or size after being stretched or compressed; (economics) responsive to change.
Collocations
- price elasticity
- income elasticity
- cross-price elasticity
- high elasticity
- low elasticity
Example sentences
- "Luxury goods often have high price elasticity of demand, meaning a small price increase can significantly reduce sales." Discussing market pricing strategies.
- "The government found that the elasticity of demand for gasoline was relatively low, so a tax increase did not significantly deter driving." Analyzing the impact of taxes on consumer behavior.
Memory hook
Think of an ELASTIC band: it stretches and snaps back, showing how much it 'responds' to being pulled. Economic elasticity measures that 'stretchiness' of demand or supply. ELASTIC = Stretchiness
When not to use
Do not use 'elasticity' as a general synonym for 'flexibility' or 'adaptability' outside of its specific economic or physical science context. It has a precise mathematical meaning.
Fun facts
- The concept of elasticity was introduced by economist Alfred Marshall in his 1890 book 'Principles of Economics'.
Explore more words
mobility, flexibility, resilience, flexible, volatility, Affordability
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