1. What Is Elasticity?

Elasticity measures the responsiveness of one variable to changes in another variable. In economics, it typically refers to how much the quantity demanded or supplied changes in response to price changes.

2. How Does The Calculator Work?

The calculator uses the elasticity formula:

Where:

• \( E \) — Elasticity coefficient (dimensionless)
• \( \%\Delta Q \) — Percentage change in quantity (%)
• \( \%\Delta P \) — Percentage change in price (%)

Explanation: The formula calculates how sensitive the quantity is to price changes. A value greater than 1 indicates elastic demand, less than 1 indicates inelastic demand, and equal to 1 indicates unit elasticity.

3. Importance Of Elasticity Calculation

Details: Elasticity calculation is crucial for businesses to set optimal pricing strategies, for governments to design effective tax policies, and for economists to understand market dynamics and consumer behavior.

4. Using The Calculator

Tips: Enter the percentage change in quantity and percentage change in price as decimal numbers (e.g., 10% as 10, -5% as -5). The calculator will compute the elasticity coefficient.

5. Frequently Asked Questions (FAQ)

Q1: What does elasticity value indicate?
A: |E| > 1 = elastic (responsive to price changes), |E| < 1 = inelastic (less responsive), |E| = 1 = unit elastic.

Q2: What are the main types of elasticity?
A: Price elasticity of demand, price elasticity of supply, income elasticity, and cross-price elasticity.

Q3: How is percentage change calculated?
A: %Δ = [(New Value - Old Value) / Old Value] × 100%

Q4: What factors affect elasticity?
A: Availability of substitutes, necessity vs luxury, time period, and proportion of income spent.

Q5: Can elasticity be negative?
A: Yes, for normal goods, price elasticity of demand is negative (inverse relationship between price and quantity).