https://www.veritaswiki.org/index.php?action=history&feed=atom&title=Elasticity_of_DemandElasticity of Demand - Revision history2026-10-19T22:00:47ZRevision history for this page on the wikiMediaWiki 1.45.3https://www.veritaswiki.org/index.php?title=Elasticity_of_Demand&diff=59&oldid=prevToto: Created English encyclopedia entry on Elasticity of Demand following Wikipedia-style standards2026-10-06T04:13:31Z<p>Created English encyclopedia entry on Elasticity of Demand following Wikipedia-style standards</p>
<p><b>New page</b></p><div>'''Elasticity of demand''' measures the responsiveness of the quantity demanded of a good or service to a change in one of its determinants, most commonly its price. It is a central concept in [[microeconomics]], used to analyse how markets react to changes in prices, incomes, and the prices of related goods.<ref name="wiki">Wikipedia contributors, "Price elasticity of demand".</ref><br />
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== Price elasticity of demand ==<br />
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The '''price elasticity of demand''' is the percentage change in quantity demanded divided by the percentage change in price:<br />
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::'''PED = (% change in quantity demanded) ÷ (% change in price)'''<br />
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Because quantity demanded generally falls when price rises, the price elasticity of demand is usually negative, and it is often reported in absolute value.<ref name="wiki"/><br />
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== Categories ==<br />
<br />
{| class="wikitable"<br />
! Value<br />
! Category<br />
! Meaning<br />
|-<br />
| |PED| > 1<br />
| Elastic<br />
| Quantity changes proportionally more than price.<br />
|-<br />
| |PED| = 1<br />
| Unit elastic<br />
| Quantity changes proportionally to price.<br />
|-<br />
| |PED| < 1<br />
| Inelastic<br />
| Quantity changes proportionally less than price.<br />
|-<br />
| |PED| = 0<br />
| Perfectly inelastic<br />
| Quantity does not change with price.<br />
|-<br />
| |PED| = ∞<br />
| Perfectly elastic<br />
| Any price increase reduces quantity to zero.<br />
|}<br />
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== Determinants ==<br />
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The elasticity of demand depends on several factors, including the availability of substitutes, the proportion of income spent on the good, whether the good is a necessity or a luxury, and the time horizon. Goods with close substitutes, luxury goods, and goods that account for a large share of income tend to have more elastic demand; necessities and goods with few substitutes tend to be inelastic.<ref name="wiki"/><br />
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== Other elasticities ==<br />
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{| class="wikitable"<br />
! Type<br />
! Measures<br />
|-<br />
| Income elasticity of demand<br />
| Responsiveness of demand to changes in consumer income.<br />
|-<br />
| Cross elasticity of demand<br />
| Responsiveness of demand for one good to the price of another.<br />
|-<br />
| [[Elasticity of Supply]]<br />
| Responsiveness of quantity supplied to price.<br />
|}<br />
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== Importance ==<br />
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Elasticity is important for firms in setting prices and for governments in designing [[taxation]] and policy. When demand is inelastic, a tax raises revenue with little reduction in quantity; when demand is elastic, the same tax leads to a larger fall in quantity. Elasticity also determines who bears the burden of a tax—the more inelastic side of the market bears a larger share.<ref name="wiki"/><br />
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== See also ==<br />
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* [[Elasticity of Supply]]<br />
* [[Supply and demand]]<br />
* [[Taxation]]<br />
* [[Microeconomics]]<br />
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== References ==<br />
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<references /><br />
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[[Category:Economics]]<br />
[[Category:Microeconomics]]<br />
[[Category:Elasticity]]</div>Toto