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Economics Elasticity Essay Businesses know that they face demand curves, but rarely do they know what these curves look like. Yet sometimes a business needs to have a good idea of what part of a demand curve looks like if it is to make good decisions. If Rick's Pizza raises its prices by ten percent, what will happen to its revenues? The answer depends on how consumers will respond. Will they cut back purchases a little or a lot? This question of how responsive consumers are to price changes involves the economic concept of elasticity. Elasticity is a measure of responsiveness. Two words are important here. The word "measure" means that elasticity results are reported as numbers, or elasticity coefficients. The word "responsiveness" means that there is a stimulus-reaction involved. Some change or stimulus causes people to react by changing their behavior, and elasticity measures the extent to which people react. The most...

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