Generally, we calculate elasticity as the

Sure, let's break it down step by step.

1. Identify the formula for elasticity: Elasticity is generally calculated using the formula:

   $\text{Elasticity} = \frac{\text{Percentage change in quantity demanded or supplied}}{\text{Percentage change in price}}$

2. Calculate the percentage change in quantity: This is done using the formula:

   $\text{Percentage change in quantity} = \frac{\text{New quantity} - \text{Old quantity}}{\text{Old quantity}} \times 100$

3. Calculate the percentage change in price: This is done using the formula:

   $\text{Percentage change in price} = \frac{\text{New price} - \text{Old price}}{\text{Old price}} \times 100$

4. Plug the values into the elasticity formula: Once you have the percentage changes, you can substitute them into the elasticity formula to find the elasticity.

For example, if the price of a product increases from $10 to$12 and the quantity demanded decreases from 100 units to 80 units:

• Percentage change in quantity:

  $\frac{80 - 100}{100} \times 100 = -20\%$

• Percentage change in price:

  $\frac{12 - 10}{10} \times 100 = 20\%$

• Elasticity:

  $\frac{-20\%}{20\%} = -1$

So, the elasticity in this example is -1, indicating that the product is unit elastic.