Elasticity, in the context of text analytics, refers to the ability of a software system to rapidly and automatically adjust its capacity to meet sudden changes in demand. This is typically done by scaling up or down the number of resources used, such as adding or removing servers from a cluster. Elasticity is a key characteristic of cloud-based systems, which are often designed to be highly scalable.
Elasticity vs. Scalability
Elasticity is sometimes confused with scalability, but the two terms are not interchangeable. Scalability refers to a system’s ability to handle increased loads by adding more resources, while elasticity refers to a system’s ability to dynamically adjust its capacity in response to changing demands.
Elasticity in Business
Elasticity refers to the ability of a good or service to maintain its current price or level of demand when there is a change in another economic variable. For example, if the price of gasoline rises, the demand for public transportation may increase, as people look for ways to save money. This is an example of price elasticity of demand.
In the business world, elasticity is a key concept in pricing, marketing, and economics. It can be used to help companies understand how changes in one variable may impact another. Elasticity can also be used to measure the responsiveness of customers to changes in price.
Major forms of Elasticity
There are three major forms of elasticity: price elasticity of demand, income elasticity of demand, and cross-price elasticity of demand.
Price elasticity of demand is a measure of how much the quantity demanded of a good or service changes in response to a change in price. If the quantity demanded increases when the price decreases, then the good is said to be inelastic. If the quantity demanded decreases when the price decreases, then the good is said to be elastic.
Income elasticity of demand is a measure of how much the quantity demanded of a good or service changes in response to a change in income. If the quantity demanded increases when income increases, then the good is said to be normal. If the quantity demanded decreases when income increases, then the good is said to be inferior.
Cross-price elasticity of demand is a measure of how much the quantity demanded of one good or service changes in response to a change in the price of another good or service. If the quantity demanded of the first good increases when the price of the second good decreases, then the two goods are said to be substitutes. If the quantity demanded of the first good decreases when the price of the second good decreases, then the two goods are said to be complements.