priceelasticity
Price elasticity of demand, commonly called price elasticity, measures how the quantity demanded of a good or service responds to changes in its price. It can be defined for a specific point on the demand curve or averaged over a price range. The concept helps explain how price movements influence consumer purchasing behavior and, in turn, market outcomes.
For demand, elasticity is typically negative due to the inverse relationship between price and quantity demanded,
Point elasticity is defined as E_d = (dQ/dP) * (P/Q). Arc (or midpoint) elasticity uses average values to
Determinants of price elasticity of demand include availability of substitutes, the portion of income spent on
Applications include pricing strategy, tax incidence analysis, and welfare assessment. Elasticities aid in forecasting revenue changes