Economics Consumer Surplus And Producer Surplus Questions
Price elasticity of demand is a measure of the responsiveness of the quantity demanded of a good or service to a change in its price. It quantifies the percentage change in quantity demanded in response to a 1% change in price. If the demand for a good is elastic, a small change in price will result in a relatively larger change in quantity demanded. On the other hand, if the demand is inelastic, a change in price will have a relatively smaller impact on quantity demanded. The price elasticity of demand is calculated as the percentage change in quantity demanded divided by the percentage change in price.