Short Answer 
Elasticity in economics measures how supply and demand for a product respond to changes in factors like price, employment, and distribution. It determines whether the quantity demanded or supplied is elastic (significantly responsive to price changes) or inelastic (little response to price changes), providing insights into market dynamics. Additionally, understanding elasticity beyond price helps describe overall market behavior and predict changes effectively.
Step 1: Understand Elasticity in Economics
Elasticity is a concept in economics that gauges how the supply or demand for a product shifts in response to changes in different factors. These factors include price, employment levels, and distribution capabilities. By understanding elasticity, one can assess the effect of external changes on the market dynamics of a particular good.
Step 2: Price Sensitivity of Supply and Demand
Elasticity primarily focuses on how the quantity supplied or demanded changes with fluctuations in price. Specifically, if the price increases and the quantity produced also increases significantly, it indicates a strong or elastic response. Conversely, if the quantity produced remains largely unchanged despite price increases, it indicates a weak or inelastic response.
Step 3: Measuring Elasticity Beyond Price
Besides price, elasticity also accounts for how the quantity supplied or demanded responds to various determinants other than price, such as employment conditions or market distribution. Evaluating these additional factors helps in constructing a comprehensive understanding of market behavior. Therefore, analyzing elasticity aids in predicting potential market changes and responses effectively.