Price Elasticity of Demand

According to the economic law of demand, consumers will purchase less of a good if the price of the good increases. This negative demand function allows economists to predict how consumers will react to changes in price. Price elasticity of demand is the most common measure used to determine consumers' sensitivity to price. The price elasticity of demand is the proportional change in demand given a change in price. In other words, the price elasticity of demand measures how a percentage change in price of a good will affect demand for that good.

Price elasticity of demand is an ...