What is the importance of elasticity concept to the government?

In Economics, Elastiticy measures the responsiveness of quantity demanded to changes in price. This means if the price changes, how strong or weak is the changes in quantity. However there are many other elasticities that we may not study in Economics. For example, there is also the elasticity to measure how sensitive are the quantity demanded to changes in advertisement. Hence, what elasticity tells us, is how the change in one variable have an impact on another variable. This is important as it helps the organization decide on the best course of action. For example, lets say one business firm decided to decrease the price, hoping to increase the quantity demanded of its product. If the consumers are not elastic, meaning not responsive to the changes in price, there will be no changes or small changes only to the quantity demanded. This means the organization cannot achieve it's goal of increased demand. This means that the organization need to have a change in its strategy, to increase the quantity demanded, either by increasing promotion activities or other ways. Another example, if the government tries to reduce the quantity demanded of a certain good, for example gambling or prostitution, either by taxation, we need to see if the industry is responsive to the tax. If it's resposive, then the government is successful, if not other measures is necessary. Hence, elasticity helps the company and the government to understand if what it's doing produces result or not. This is important, as in Economics, resources are scarce, it's unwise to use resources and the final outcome is not achieved. As a teacher, I introduce the elasticity concept to them, by saying that some students are very responsive to punishements, while others are not responsive to punishments at all. Whether a students is responsive or not, can depend on other factors as well. Hope this helps. (cheong@bgymail.gd.cn)