View source for Elasticity of demand

'''Elasticity of demand''' is an [[economics|economic]] concept which measures the change in the [[demand|quantity demanded]] that results from a change in [[price]] of a good or service, or more specifically elasticity of demand equals the percentage change in quantity demanded divided by the percentage change in price. Elasticity of demand can be seen as a measure of the responsiveness or sensitivity of buyers in the quantity they demand of a good or service to a given price change.<ref name="foundations">Shapiro, Milton. [http://mises.org/resources/3135 "Foundations of the Market-Price System"], 2007, page 144-145.</ref> Elasticity of demand can be divided into three categories, elastic, inelastic and unitary.<ref name="foundations" /> An elastic response is said to occur when a percentage change in price results in a larger percentage change in quantity demanded, while an inelastic response occurs when a percentage change in price results in a smaller percentage change in quantity demanded. A unitary response occurs in the rare case where a percentage change in price results in an exactly equal percentage change in quantity demanded. Elasticity of demand is reflected in the slope of a demand curve, a slope which becomes more horizontal reflects an increase in elasticity, while a demand curve whose slope becomes more vertical reflects an increasing level of inelastic demand.  

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[[Category:Economic concepts]]
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