# Principles of Economics/Elasticity

**Elasticity** refers to the degree to which one value changes when another does. Supply and demand change with respect to price; investment and savings change with respect to interest rate. The name is "X elasticity of Y" where a change in X causes a change of magnitude (the elasticity * Y):

where

- is initial price
- is final price
- is initial supply
- is final supply
- is initial demand
- is final demand
- is initial interest
- is final interest
- is initial investment
- is final investment
- is initial savings
- is final savings

*Price elasticity of demand*

*Price elasticity of supply*

*Interest elasticity of investment*

*Interest elasticity of savings*

## Cross elasticities[edit]

The elasticities mentioned above refer to one object. Cross elasticities refer to the effects of something's price, interest, etc. on something *else*. This comes into play with substitute and complementary goods.