Elasticity of Demand

Elasticity of demand- the measure of how consumers react to a change in price

Elastic demand- demand that is very sensitive to a change in price. (E>1) Not a necessity.

Inelastic demand- demand that is not sensitive to a change in price. (E<1). Is a necessity.

 Unitary demand- demand in a perfect world. (E=1)

Finding the elasticity

%change in quantity= new quantity-old quantity/ old quantity

%change in price= new price-old price/ old price