Explain price elasticity of demand.
Price elasticity of demand is the measure of the degree of responsiveness of the demand for a good to the change in its price. The price elasticity of demand can be defined as the change in the demand of a particular commodity due to the change in its price.
According to Lipsey - "Price elasticity of demand is defined as the percentage of change in quantity demanded divided by the percentage change in price."
Where
Ed – Elasticity of demand
Proportionate change in quantity demanded = (q1-q0)/q0
Proportionate change in price = (p1-p0)/p0
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