The Elasticity is the responsiveness of the quantity demanded of a commodity to changes in its price; defined as the percentage change in quantity demanded divided by the percentage change in price.
The Elasticity concept is very important for running a business because the elasticity concept affects on overall income about providing the service or products in the business. When the price elasticity for a good is inelastic, the company does not need to increase or decrease the amount of its supply for the good because in spite of the situation that there is a change on price of a good, the amount of demand for the good would not be significantly changed. On the other hand, if the price elasticity for the good is elastic, the company would shift the amount of the good supplied; Under the elastic case, the increase of the price means that the benefit for the company goes up. Accordingly, the company would raise the quantity of the supplied good.
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