Price Elasticity of Demand
Definition
Percentage change in quantity demanded divided by percentage change in price. The headline measure of how responsive demand is.
Example
Elasticity of −2 means a 10% price hike cuts demand by 20%.
Percentage change in quantity demanded divided by percentage change in price. The headline measure of how responsive demand is.
Elasticity of −2 means a 10% price hike cuts demand by 20%.