The __________ of demand measures the responsiveness of quantity demanded to a change in price, indicating how much the quantity demanded will change in percentage terms in response to a one percent change in price.

The price elasticity of demand measures the responsiveness of quantity demanded to a change in price, indicating how much the quantity demanded will change in percentage terms in response to a one percent change in price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price, giving a single number that shows whether demand is elastic, unitary, or inelastic. When the elasticity is greater than one, demand is elastic and consumers react strongly to price changes; when less than one, demand is inelastic and consumers react weakly. For example, if a 10 % price increase causes quantity demanded to fall by 20 %, the price elasticity of demand is −2, meaning demand is quite elastic.