Price elasticity of demand measures the responsiveness of demand after a change in price
The formula for calculating the co-efficient of elasticity of demand is:
Percentage change in quantity demanded divided by the percentage change in priceSince changes in price and quantity usually move in opposite directions, usually we do not bother to put in the minus sign. We are more concerned with the co-efficient of elasticity of demand
How much does quantity demanded change when price changes? By a lot or by a little? Elasticity can help us understand this question
Values for price elasticity of demand
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