3.3 - Price Elasticity Of Demand

  • Created by: Ezzb
  • Created on: 24-06-21 10:30

Price Elasticity Of Demand 

What is elasticity ? 

- Elasticity measures the responsiveness of demand to a change in a relevant variable - such as price or income 

Law of demand 

= Price up - Demand goes down 

= Price down - Demand goes up 

Price elasticity looks beyond the law of demand to ask the more subtle question. 

Price elasticity of demand 

Price elasticity of demand measures the extent to which the quantity of a product demanded is affected by a change in price 

Relative Elasticity 

Price Elastic - % change in price results in a larger % change in demand

Product examples - Big Mac Meal / Transatlantic flights 



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