Elasticity : In economics, elasticity is the ratio of the percentage change in one variable to the percentage change in another variable. Elasticity is a popular tool among empiricists because it is independent of units and thus simplifies the analysis. ...
Elasticity of Demand : The demand of a commodity depends on its price and the other factors such incomes, tastes etc. In that case, demand is dependent variable and other factors are independent variables.
The elasticity of demand is the ratio of the percentage change in demand to the percentage change in other independent variables. This can be shown as,
Elastic Demand : When a small change in price brings a big change in demand then the demand is elastic. That way, elastic good is the one whose little change in price makes big change in demand. Usually these kinds of products are readily available in the market and a person may not necessarily need them in his or her daily life. For example, if the price of any soft drinks falls, its demand will increase a lot. So soft drinks are elastic goods and the demand of soft drinks are elastic demands.
Inelastic Demand : When a big change in price brings a small change in demand then the demand is inelastic. That way, inelastic good is the one whose big change in price brings a little change demand. These goods tend to be things that are more of a necessity to the consumer in his or her daily life. For example, if the price of salt raises a lot, though people will buy almost as the previous quantity. So, salt is an inelastic good and the demand of salt is inelastic.