Price elasticity of demand

Price elasticity of demand measures the percentage change in quantity demanded caused by a percentage change in a good’s price, holding other influences constant.

Elasticity: A measure of how much one variable responds proportionally to a change in another. Price elasticity of demand is one specific application of this general measure.
Total revenue: A seller’s receipts from sales, calculated as price multiplied by quantity sold. Elasticity predicts whether a price increase raises or lowers total revenue.
Demand curve: A graph showing quantities buyers are willing to purchase at different prices, other things equal. Elasticity describes how responsive movement along this curve is to price changes.
Gasoline demand: The quantity of gasoline consumers are willing to buy at different prices. Short-run gasoline demand is often relatively inelastic because travel habits adjust slowly.
Percentage change: A change expressed as a proportion of an initial value, usually multiplied by 100. The measure compares percentage changes rather than raw changes in price and quantity.
Tax incidence: The distribution of a tax’s economic burden between buyers and sellers. Relative demand and supply elasticities determine who bears more of a tax.
Law of demand: The principle that quantity demanded generally falls when price rises, other things equal. It describes the usual direction of response; elasticity measures its proportional strength.
Tobacco demand: The quantity of tobacco products consumers are willing to buy at different prices. Addiction and dependence can limit consumers’ immediate response to price increases.
Point elasticity: An elasticity calculated at a particular point on a demand curve using local changes. It captures responsiveness at one price and quantity, especially for small changes.
Excise tax: A tax imposed on the sale or use of a particular good or service. Demand elasticity helps predict how much an excise tax changes purchases and prices.

Linked from 23 pages