In economics, elasticity is the ratio of the percent change in one variable to the percent change in another variable..

Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (holding constant all the other determinants of demand, such as income). It was devised by Alfred Marshall

Elasticities of demand are interpreted as follows Value Descriptive Terms

Ed = 0

Perfectly inelastic demand

- 1 < Ed < 0

Inelastic or relatively inelastic demand

Ed = - 1

Unit elastic, unit elasticity, unitary elasticity, or unitarily elastic demand

- < Ed < - 1 Elastic or relatively elastic demand

Ed = -

Perfectly elastic demand

relatively inelastic when the percentage change in quantity demanded is less than the percentage change in price (so that Ed ! " #)$

unit elastic, unit elasticity, unitary elasticity, or unitarily elastic demand when the percentage change in quantity demanded is equal to the percentage change in price (so that Ed % " #)$ and relatively elastic when the percentage change in quantity demanded is greater than the percentage change in price (so that Ed & " #).

Effect on total revenue

'hen the price elasticity of demand for a good is perfectly inelastic (Ed % (), changes in the price do not affect the quantity demanded for the good$ raising prices will cause total revenue to increase. 'hen the price elasticity of demand for a good is relatively inelastic (" # & Ed & (), the percentage change in quantity demanded is smaller than that in price. )ence, when the price is raised, the total revenue rises, and vice versa. 'hen the price elasticity of demand for a good is unit (or unitary) elastic (Ed % "#), the percentage change in quantity is equal to that in price, so a change in price will not affect total revenue. 'hen the price elasticity of demand for a good is relatively elastic (" & Ed & " #), the percentage change in quantity demanded is greater than that in price. )ence, when the price is raised, the total revenue falls, and vice versa. 'hen the price elasticity of demand for a good is perfectly elastic (Ed is * ), any increase in the price, no matter how small, will cause demand for the good to drop to +ero. )ence, when the price is raised, the total revenue falls to +ero.
'hen demand is more elastic than supply, producers will bear a greater proportion of the ta, burden than consumers will.

Elasticities of demand
Price elasticity of demand

-rice elasticity of demand measures the percentage change in quantity demanded caused by a percent change in price. As such, it measures the e,tent of movement along the demand curve. .his elasticity is almost always negative and is usually e,pressed in terms of absolute value (i.e. as positive numbers) since the negative can be assumed. In these terms, then, if the elasticity is greater than # demand is said to be elastic$ between +ero and one demand is inelastic and if it equals one, demand is unit"elastic. Income elasticity of demand

Income elasticity of demand measures the percentage change in demand caused by a percent change in income. A change in income causes the demand curve to shift reflecting the change in demand. IE/ is a measurement of how far the curve shifts hori+ontally along the 0"a,is. Income

elasticity can be used to classify goods as normal or inferior. 'ith a normal good demand varies in the same direction as income. 'ith an inferior good demand and income move in opposite directions.123 Cross price elasticity of demand

4ross price elasticity of demand measures the percentage change in demand for a particular good caused by a percent change in the price of another good. 5oods can be complements, substitutes or unrelated. A change in the price of a related good causes the demand curve to shift reflecting a change in demand for the original good. 4ross price elasticity is a measurement of how far, and in which direction, the curve shifts hori+ontally along the ,"a,is. A positive cross" price elasticity means that the goods are substitute good

Elasticities of supply
Price elasticity of supply

.he price elasticity of supply measures how the amount of a good firms wish to supply changes in response to a change in price.163 In a manner analogous to the price elasticity of demand, it captures the e,tent of movement along the supply curve. If the price elasticity of supply is +ero the supply of a good supplied is 7inelastic7 and the quantity supplied is fi,ed. Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. More precisely, it gives the percentage change in quantity demanded in response to a one percent change in price (holding constant all the other determinants of demand, such as income). It was devised by Alfred Marshall 8uestion -rice #2( ##( #(( ;( <= 8uantity #(( 2(( 29( 66( 69( e 9.:9 6.#6 #.; #.(6 (.;#