Elasticity is a term used in economics to describe how price changes affect the amount of goods sold. It is commonly used by business owners as a way to determine how to price their products. Elasticity can also give insight to consumer behavior. For consumers, understanding elasticity can also be helpful as it can help them understand what influences price changes and the effects price changes may have. How Elasticity Works Elasticity is driven by the principles of supply and demand. How elastic a product, service, or price is often depends on how many alternative options there are. When there are multiple alternative options for a product or service, the demand is usually elastic, or is sensitive to price changes. Elasticity vs Inelasticity When prices for a staple food like eggs go up, people are still likely to buy them. In other words, people usually still buy eggs even if the price goes up. That is because the demand for eggs is relatively inelastic. The same could apply to a basic necessity like gasoline. On the other hand, if a brand name cereal went from