Final answer:
In cloud computing, elasticity refers to the ability to automatically allocate resources to meet demand. This dynamic allocation ensures efficiency and cost-effectiveness. It differs from vertical scaling, load balancing, and horizontal scaling, which do not adjust automatically to changing demand.
Step-by-step explanation:
The concept in cloud computing that refers to increasing or decreasing compute resources based on demand is elasticity. Elasticity in the context of cloud computing means the ability to dynamically allocate resources as needed. If the demand on an application increases, the cloud platform automatically allocates more resources to handle the load. Conversely, as demand decreases, resources are scaled back to reduce cost and waste.
This concept is essential for businesses that experience fluctuating levels of traffic and ensures they only pay for what they use, enabling efficient usage of computing resources. It is different from other concepts such as vertical scaling (which involves adding more power to an existing machine), load balancing (which is about distributing workloads across multiple computing resources), and horizontal scaling (which involves adding more machines to work in parallel).