What is the elasticity of demand?
It is the demand for a commodity that moves in the contrary direction of its price. However, the influence of the price change is not always constant . Sometimes, the demand for a commodity changes substantially, even for smaller price changes. On the other hand, there are some commodities for which the demand is not impacted much by price changes.
The demands for some commodities are receptive to the change in its price, while the demands for others are not so receptive to the price changes. The price elasticity of demand is the quantity of the receptiveness of the demand for a commodity to change in its price.
The price elasticity of demand for a commodity is defined as the percentage of change in demand for the commodity divided by the percentage change in its price. The price elasticity of demand for a good is derived as follows:
Elasticity of demand = Percentage change in demand for the goods ÷ Percentage change in price for the goods
This is detailed and clear information about the concept elasticity of demand. To learn more about such interesting concepts, stay tuned to BYJU’S.