Add Yahoo as a preferred source to see more of our stories on Google. Economists use elasticity of demand to gauge how responsive consumers are to changes in price and income, but investors can also ...

Price elasticity measures how demand changes with price adjustments; key for investment decisions. Investors should focus on companies developing inelastic products for greater pricing power.

Demand elasticity is a phenomenon where demand for a specific good or service changes depending on factors such as how it is priced, whether alternatives are available or local income trends.

The law of supply and demand explains how changes in a product's market price relate to its supply and demand. Demand for basic necessities is less responsive.

Adam Hayes, Ph.D., CFA, is a financial writer with 15+ years Wall Street experience as a derivatives trader. Besides his extensive derivative trading expertise, Adam is an expert in economics and ...