Economics Supply And Demand 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 indicates how sensitive consumers are to changes in price. The concept is calculated by dividing the percentage change in quantity demanded by the percentage change in price. If the resulting value is greater than 1, demand is considered elastic, meaning that a small change in price leads to a proportionally larger change in quantity demanded. If the value is less than 1, demand is considered inelastic, indicating that changes in price have a relatively small impact on quantity demanded. A value of exactly 1 represents unitary elasticity, where the percentage change in quantity demanded is equal to the percentage change in price.