Economics and Statistics

In economics, the term elasticity is used to refer to the ratio of the change of an economic variable to the change in another . In our context, elasticity will mainly be used to describe the relationship between a change in quantity to the change in price. If the change in quantity is equal to the change in price, then this change can be described as unit elastic . Another way to think about this concept is that the change in price will create a proportional change in quantity. If the quantity change is larger than the change in price then the change is  elastic . If the quantity change is smaller than the price change then the change is inelastic . Price elasticity of demand: it describes the relative change of quantity demanded to a change in price.  Price elasticity is calculated by simply dividing the rate of change in quantity by the rate of change in price. An alternative method that is equivalent is: where M is the slope of a linear demand cu...