Calculating it will answer important questions like : if price rises by a certain amount, by how much will demand fall, and total revenue change?

We use the Greek letter ''eta'' or h

To make the model easier to understand, we will continue using straight lines for the demand and supply curves. What we will now look at is the slope of these curves: are the curves ''flat'' or ''steep''? Be aware, though, that there is no necessary reason for a demand or supply curve to be a straight line.

There are three methods that can be used to measure elasticity. The simplest is called the total outlays method.