Price Elasticity of Demand
The responsiveness of customer demand to a change in price. Demand is elastic when the response is strong and inelastic when it is weak.
This exam asks you to classify demand as elastic or inelastic and reason to the revenue consequence, never to calculate a coefficient.
Often confused with
- Pricing Power
- Pricing power is the business's room to raise prices; elasticity is the measure of how strongly customers react when it does.
Taught in
See also
2.5.B.3