Topic summary
Price elasticity
Extracted from the Wikipedia article Elasticity (economics).
Price elasticity of demand
Price elasticity of demand measures sensitivity of demand to price. Thus, it measures the percentage change in demanded quantity for a good in response to a change in its own price. More precisely, it gives the percentage change in quantity demanded in response to a one per cent change in price (ceteris paribus, i.e. holding constant all the other determinants of demand, such as income). Expressing this mathematically, price elasticity of demand is calculated by dividing the percentage change in the quantity demanded by the percentage change in the price.