What is the best definition of elasticity in economics? elasticity of supply measures how the amount of a good changes when the producer hires more employees. elasticity of supply measures how the amount of a good changes when the producer uses new materials. elasticity of demand measures how the amount of a good changes when its price goes up or down. elasticity of demand measures how the amount of a good changes when its distribution expands.

The best definition of elasticity in economics is the elasticity of demand measures how the amount of a good change when its price goes up or down.

Further explanation:

Elasticity of demand:

Elasticity of demand is also known as price elasticity of demand which is used to measure the change in aggregate demand of the product in relation to its price of that product or service.

Elasticity can be calculated by the following formula:

How the elasticity of demand is affected:

Greater than 1: When the elasticity is more than 1, it shows that the demand is affected by its price.

Less than 1: When the elasticity is less than 1, it shows that the demand is very rarely affected by its price.

Elasticity of supply:

Elasticity of supply refers to the change in the quantity supplied by the producer with reference to the price of the product.

Justification for the correct and incorrect

Elasticity of supply measures how the amount of a good change when the producer hires more employees: This answer is incorrect.

Elasticity of supply is much affected by the price or the quantity produced of that product but not by hiring more employees. The elasticity of supply is a change in the quantity supplied by the producer with reference to the price of the product. Hiring more employees will not affect the change of elasticity of supply.

Elasticity of supply measures how the amount of a good change when the producer uses new materials: This answer is incorrect.

The elasticity of supply is not affected when the producer uses new materials. Using new materials will increase in the production of goods.

Elasticity of demand measures how the amount of a good change when its price goes up or down: This answer is correct.

The elasticity of demand is highly affected by the quantity of the product and the price of that product. It is being assumed that the taste, prices of other products and income of people are constant.  

Elasticity of demand measures how the amount of a good change when its distribution expands: This answer is incorrect.

The expand in the distribution does not affect the elasticity of demand. An increase in the distribution of demand will lead to the higher production of the goods.

Thus, the best definition of elasticity in economics is the elasticity of demand measures how the amount of a good change when its price goes up or down.

Learn more:

1.Demand and type of goods

2.Demand and supply of goods

3.Elasticity of demand

Answer details:

Grade: Middle School

Subject: Economics

Chapter: Elasticity  

Keywords: what is the, best definition, of elasticity, in, economics, supply, measures, how, amount, price, quantity, supplied, goes up, down, product, quantity.

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