Understanding Price Elasticity of Demand

It refers to how the demand for a certain product changes in regard to a price change.

Elastic demand occurs when demand vary greatly in response to price fluctuations.

Inelastic demand happens when the change in demand is nothing or little when the price changes.

<p>Elasticity is defined as a change in the price for a product that results in significant shift in either supply or demand.</p> Signup and view all the answers

<p>If a product's price change causes little, if any, change in supply or demand, it is deemed inelastic.</p> Signup and view all the answers

<p>Inelastic demand is when the quantity demanded for a good or service remains relatively constant even when the price changes.</p> Signup and view all the answers

<p>Electricity is an example of a product with inelastic demand.</p> Signup and view all the answers

<p>Elastic demand is when the quantity demanded for a good or service varies significantly with price changes.</p> Signup and view all the answers

<p>Inelastic demand results in higher revenue for electricity providers.</p> Signup and view all the answers

<p>Price increases can lead to revenue losses for luxury cars due to elastic demand.</p> Signup and view all the answers