Elasticity refers to the ability of a material or object to return to its original shape after being stretched or compressed. For example, a rubber band can be stretched and will return to its initial form when released. This property is important in various fields, including physics and engineering, as it helps determine how materials behave under different forces. In economics, elasticity measures how the quantity demanded or supplied of a good changes in response to price changes. For instance, if the price of gasoline rises, the demand may decrease, indicating that consumers are sensitive to price changes. Understanding elasticity helps businesses and policymakers make informed decisions.