Economics Price Discrimination Questions
Price elasticity of demand is a measure of the responsiveness of quantity demanded to a change in price. It quantifies the percentage change in quantity demanded in response to a 1% change in price. If the demand for a product is elastic, a small change in price will result in a proportionately 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. Price elasticity of demand helps businesses determine the optimal pricing strategy and understand how changes in price will affect their revenue.