Economy Essay No. 2: How useful is knowledge of elasticity for a business?

The knowledge of elasticity is of great importance for a business. The elasticity of an item shows if people will still buy the item when the price goes up, or if they would stop buying the item at that time. If an item is still being bought when the price goes up, it is an elastic item. If the item is not being bought anymore, it is an inelastic item. It is very important for a businessman to know whether the goods he is selling are elastic or inelastic, as his entire business plan should depend on it. Therefore knowledge of price elasticity, both of supply and demand, is very important.