How does the concept of elasticity of demand influence consumer behavior when prices fluctuate in a competitive market?

Elasticity of demand measures how much the quantity demanded of a product changes when its price changes. In a competitive market, if the price of a product goes up and demand is elastic, consumers will buy less of it because they can find cheaper alternatives. For example, if the price of a popular snack increases, people might choose to buy a different snack instead. On the other hand, if demand is inelastic, consumers will continue to buy the product even if the price rises because they feel it is a necessity, like medicine. This concept helps businesses understand how to set prices and predict how consumers will react to price changes.