Add Yahoo as a preferred source to see more of our stories on Google. Economists use elasticity of demand to gauge how responsive consumers are to changes in price and income, but investors can also ...

Discover the income effect and price effect differences to better understand demand changes in economics. Learn how these concepts affect financial analysis.

Demand elasticity is a phenomenon where demand for a specific good or service changes depending on factors such as how it is priced, whether alternatives are available or local income trends.

Elasticity is a method of measuring the likelihood of one economic factor affecting another, such as when the price of an item affects consumer demand or when supply affects how much something costs.