Elasticity: A measure of how much one economic variable responds to changes in another
economic variable.
Price elasticity of demand: the responsiveness of the quantity demanded to a change in
price, measured by dividing the percentage change in the quantity demanded of a product
demanded of a product by the percentage change in the product’s price
Elastic demand: Demand is elastic when the percentage change in quantity demanded is
greater than the percentage change in prince, so the price elasticity is greater than 1 in
absolute value
Inelastic demand: Demand is inelastic when the percentage change in quantity demanded
is less than the percentage change in price, so the price elasticity is less than 1 in absolute
value
Unitelastic demand: Demand is unit elastic when the percentage change in quantity
demanded is equal to the percentage change in price, so the price elasticity is equal to 1 in
absolute value.
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 Fall '11
 IreneFoster
 Price Elasticity, Supply And Demand, percentage change

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