How does elasticity effect price?

Answer 1

Elasticity is the measure of how much price changes given a change in supply or demand of a good.

A good that has a high elasticity will have a larger change in quantity demanded for a higher price.
A good that has low elasticity, also called inelastic, will have little change in quantity demanded for a change in price.

A classic inelastic good is pharmaceuticals. One would be willing to pay almost any price for a life-saving drug.

An elastic good is e-mail. If the price of e-mail went up, one would just use other methods of communication and reduce the amount of e-mails they send.