The point of this essay is to clarify and point up the different concepts of elasticity of demand passing through examples and diagrams.

The point of this essay is to clarify and point up the different concepts of elasticity of demand passing through examples and diagrams. In every market economy, when the price of a good rises the quantity demanded will fall and vise versa. Conversely, in most cases this is not enough. We would also like to know how much will the quantity demanded rise or fall. In other words, we will want to know how responsive demand is to a rise in price. This responsiveness of quantity demanded to a change in price is what we call price elasticity of demand. Therefore, what we want to compare is the size of the change in quantity demanded with the size in the change in price. Because of the different units that price and quantity are measured in, the only approach we can do this is to use percentage or proportionate changes. From this derives the "formula of the price elasticity of demand (PED)" for a product, which is the percentage (or proportionate) change in quantity demanded divided by the percentage (or proportionate) change in price. Putting this formula in symbols we have: PED= %?QD %?P Where E is the Greek E and is the symbol we use for elasticity and ? is the capital Greek delta and is the symbol we use for a "change in". As it was mentioned before, elasticity of demand is measured in proportionate or percentage terms. This happens for three different reasons. To begin

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