Why the concept of elasticity is important to the students of economics?
Elasticity tells you a lot of things about your demand and your supply. There are four kinds of elasticities, price elasticity of demand, income elasticity of demand, cross price elasticity of demand and price elasticity of supply. Price elasticity of demand examines the responsiveness of consumer demand to a change in price which is important to know because then we know whether its more profitable to increase or decrease price. Income elasticity of demand is the responsiveness of consumer demand to a change in income this helps economists with classifying goods as inferior (the higher the income the lower the consumption) or normal (the higher the income the higher the consumption). Cross price elasticity of demand is the responsiveness of consumer demand to a change in a competitors price this helps economists in understanding whether goods are complements (demand for one leads to demand for another) or substitutes (demand for one means less demand for another). Finally price elasti
