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