Price Elasticity of Demand
- Elasticity of Demand:
-measure of how consumers react to a change in price - Elastic Demand:
-Demand that's very sensitive to change in price
-Product is not a necessity
-There are available substitutes
1) Soda
2) Fur-coat
3) Pizza
-E > 1 - Inelastic Demand:
-Demand that's not very sensitive to a change in price
-Product is a necessity
-There are few or no substitutes
1) Gas
2) Salt
3) Insulin
-E < 1 - Unitary Demand:
-E = 1
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