Elasticity of Demand

Price Elasticity Demand: Tells how drastically buyers will cut back or increase their demand of a good when price rises or fall.

• Elastic Demand: The demand that will change greatly if theres a change in price "many substitute" E > 1
• Inelastic Demand: The demand for product will not change regardless of the price "few or no substitute" E < 1
• Unit Elastic (Unitary Elastic): The price elasticity of demand is equal to 1. E = 1

The Formulas to solve Elasticity Problems.

1. % Δ in quantity
                         New Quantity - Old Quantity
                                    Old Quantity

2. % Δ in price
                        New Price - Old Price
                                 Old Price

3. PED - Price Elastic of Demand
                        Δ in quantity
                         Δ in price