The Elasticity Of Demand

o last ¡city a measure of the nwpon-

wvenpja of quantity demanded or quantity Mpp<>ed to one of its determinants price elasticity of demand a measure of how much the quantity demands of a good responds to a chango in the price of that good, computed as the percentage change in quantity demanded divided by the percentage change in price

When we introduced demand in Chapter 4, we noted that consumers usually buy more of a good when its price is lower, when their incomes art? higher, when the prices of substitutes for the good are higher, or when the prices of complements of the good are lower. Our discussion of demand was qualitative, not quantitative. That is, we discussed the direction in which quantity demanded moves but no I the size of the change- To measure how much consumers respond to changes in these variables, economists use the concept of elasticity.

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