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Ot to be confused with economic stickiness, elasticity is an underlying theory in matters of pricing and demand that deals with response. The elasticity of good refers to how quickly then said good responds to a specific factor. In this light the common concept "price elasticity of demand" deals with the responsiveness of demand to a change in price. When a product is said to be price elastic, it means that the demand for the product changes according to the specific price. Although this seems natural in accordance to the law of demand, computing the actual price elasticity assists firms to boosts their revenue by tweaking prices by just the right amount. Some commodities such as cigarettes, alcohol or even oil have a unique situation. Despite changes in price the demand for these commodities remains virtually the same. Such goods are said to be price inelastic.

Source: G.F Stanlake. Introductory Economics.
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Title Annotation:Vox Cognoscentis
Publication:Namibia Economist (Windhoek, Namibia)
Date:Apr 26, 2013
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