## Quick Reference

The ratio between the proportional change in one variable and the proportional change in another. For two variables *x* and *y* the elasticity

ε=(*dy*/*y*)/(*dx*/*x*).

The concept is useful because comparisons of proportional changes are independent of the units in which the variables, such as price or quantity, are measured. As

(*dy/y*)/(*dx/x*)=*d*(log *y*)/*d*(log *x*),

elasticity equals the ratio of changes in the logarithms of the two variables. See also arc elasticity; point elasticity.

**From:**
elasticity
in
A Dictionary of Economics »

*Subjects:*
Economics.