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Percentage Change and Price Elasticity of Demand definitions

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  • Elasticity
    Sensitivity of one variable to changes in another, often used to measure consumer response to price shifts.
  • Price Elasticity of Demand
    A measure showing how much quantity demanded changes in response to a price change for the same product.
  • Quantity Demanded
    The amount of a product consumers are willing to buy at a specific price during a given period.
  • Percentage Change
    A calculation using the difference between new and original values, divided by the original value, to express change as a percent.
  • Absolute Value
    A mathematical approach where only the magnitude of a number is considered, ignoring any negative sign.
  • Elastic Demand
    A situation where a small price change leads to a large change in quantity demanded, indicating high consumer sensitivity.
  • Inelastic Demand
    A scenario where even large price changes cause only minor changes in quantity demanded, reflecting low consumer sensitivity.
  • Unit Elastic Demand
    A case where the percentage change in quantity demanded equals the percentage change in price, showing moderate sensitivity.
  • Denominator
    The bottom part of a fraction, crucial in percentage change calculations and affecting elasticity results.
  • Numerator
    The top part of a fraction, representing the difference between new and original values in percentage change formulas.
  • Supply and Demand Model
    A framework illustrating how prices and quantities are determined in markets through interactions of buyers and sellers.
  • Unit-Free Measure
    A result without specific units, making interpretation dependent on context rather than measurement scale.
  • Average Value
    A method using the mean of original and new values in calculations to ensure consistency in elasticity results.