Meaning of Elasticity
We have studied the law of demand and we have seen that there is an inverse relation between demand and price. change (rise or fall)in price leads generally to a change (contraction or extension) of demand. This attribute of demand by virtue of which it stretches or contracts under the pres rue of a change in price is known as Elasticity of Demand. The term elasticity e presses the degree of correlation between
demand and price.It is the rate at which the quantity demanded varies with a change in price. Elasticity of demand is the measure if the responsiveness of demand to changing prices. To be more exact, “The elasticity if demand is a measure if the relative change in amount purchased in response to a relative change in price on a given demand curve. I Another pres definition is by Mrs. Joan Robinson thus: The elasticity of demand, at any price or at any output, is the proportional change of amount purchased in response to a small change in price, divided by the proportional change in price. Other things are assumed to remain constant. e.g., other prices, consumer’s income.
A Sonny board is elastic. It may be carefully noted that elasticity depends primarily on prenuptial or percentage changes and not on absolute changes in “rice and quantity demanded.