## Price and Demand Movement: Understanding the True Elasticity in Markets

When you see the price of Bitcoin rise by 10% in one hour, do you expect that the الطلب will also increase by 10%? The answer: not necessarily. This is where the concept of **elasticity** comes into play, which helps you understand the true relationship between changes in price and changes in purchasing behavior.

### What is flexibility in simple terms?

Elasticity is an economic indicator that measures the degree of responsiveness of a certain variable—such as the quantity demanded—to changes in another variable, usually price. In other words, elasticity reflects how sensitive the market is to price changes.

There are three main scenarios:

**1. High Flexibility ( Greater than 1.0):** The order reacts strongly to price changes. A slight increase in price may lead to a significant decrease in demand.

**2. Balanced Flexibility ( equals 1.0):** The change in order is exactly proportional to the change in price.

**3. Low elasticity ( less than 1.0):** Demand does not respond significantly to price changes, meaning consumers will buy regardless of the price.

### Practical examples bring you closer to reality

**Gasoline: An Inelastic Product**

Gasoline is a daily necessity for millions of people. Even if the price rises by 20%, most people cannot significantly reduce their consumption. Therefore, the demand for gasoline is relatively inelastic—it does not change much with price changes.

**Luxury Goods: Flexible Products**

When the price of luxury gold watches rises, consumers easily switch to cheaper alternatives or stop purchasing altogether. The demand for luxury products is very elastic because they are not essential.

### How to use flexibility in trading?

In financial markets, understanding elasticity gives you a competitive advantage:

**1. Discovering Arbitrage Opportunities:**
If you notice that the price of a cryptocurrency has risen by 5% on a certain platform, but the order has not decreased—this indicates inelastic demand. There may be an opportunity to buy larger quantities.

**2. Improve Trading Strategy:**
In markets with elastic demand, you can exploit short-term price fluctuations through momentum strategies. Meanwhile, in markets with inelastic demand, you may focus on accumulating assets in the long term.

**3. Anticipate market movements:**
When supply is limited ( inelastic ) and demand is strong, even a slight increase in interest can lead to large price jumps.

### Why is flexibility important in your daily life?

Flexibility is not just a theoretical concept. In the field of engineering and construction, engineers need to understand how materials respond to stress and strain. In healthcare, understanding the flexibility of skin and tissues aids in the development of treatments. Even in environmental science, the flexibility of ecosystems determines their ability to respond to climate changes.

### Summary

**Elasticity** is a powerful tool for understanding how the market responds to changes. Whether you are a trader looking to identify opportunities or an investor wishing to make smarter decisions, understanding elasticity—whether it’s demand or supply—will help you read the market more deeply and take more effective steps.