Price Elasticity of Demand
Also called: elasticity, elastic demand, inelastic demand
Price elasticity of demand measures how much quantity demanded changes when price changes. Demand is elastic when the response is proportionally larger than the price move and inelastic when it's smaller. It decides who really pays a tax, whether a price rise raises or lowers revenue, and why insulin and cigarettes can be taxed heavily while restaurant meals cannot.
Formula
Elasticity = % change in quantity ÷ % change in price
Where this is taught
Definitions are the trailer. These free levels turn Price Elasticity of Demand into something you play — one bite-size lesson, with worked examples, a quiz and XP.