Elasticities are the responsiveness of the market to changes in the price of the good. When the prices increased, this may be purchased, with this will depend on the responsiveness of the good to the changes in price. Some goods are very important to the consumer, while others are trivial, so when the prices of these items change the consumer would have a different response
It is therefore important that the producer has some idea about the elasticity of demand. The producer must be able to work out the importance of the good to the customer and how much the customer is willing to pay for further units of the good. This is very important because the world is constantly changing, new goods are coming onto the market, seasons change, government taxation may change, and there are many factors that the business community must take into account. These factors determine the size of the elasticity number. This will be dealt with throughout your studies with us, it is a recurring theme in economics.
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