Consumer Elasticity Costs >>  Elasticity

What is elasticity of demand

  • Elasticity measures the change in quantity demanded (Qd) of good x due to a change in its price.
  • Based on the basic economic laws of demand and supply, as prices increase, the quantity demanded goes down and as prices go down, the quantity demanded increases
  • Price and quantity demanded have an inverse relationship.
  • Elasticity is a precise (exact) mathematical measure of the change in quantity demanded due to a price change.