Overview
Price elasticity of demand is a crucial concept in economics that helps us understand how consumers react to price changes. It categorizes demand into elastic, inelastic, and unitary, providing insights into consumer behavior and market dynamics. By analyzing elasticity, businesses can make informed...
Key Terms
Example: Luxury goods often have elastic demand.
Example: Essential goods like medicine have inelastic demand.
Example: If price increases by 10%, demand decreases by 10%.
Example: Butter and margarine are substitutes.
Example: Water is a necessity.
Example: Designer handbags are luxuries.
Related Topics
Key Concepts
Elastic DemandInelastic DemandUnitary ElasticityFactors Affecting Elasticity