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Percentage Change and Price Elasticity of Demand definitions

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  • Elasticity
    A measure of sensitivity between two variables, allowing comparison across products by removing units.
  • Percentage Change
    A calculation using the difference between new and original values divided by the original, expressed as a proportion.
  • Quantity Demanded
    The amount of a product consumers are willing to purchase at a specific price during a given period.
  • Price
    The monetary value assigned to a product, influencing consumer purchasing decisions and demand.
  • Price Elasticity of Demand
    A ratio showing how much quantity demanded responds to a change in price, using percentage changes.
  • Absolute Value
    A mathematical approach that considers only the positive magnitude, ignoring negative signs in elasticity calculations.
  • Elastic Demand
    A situation where the percentage change in quantity demanded exceeds the percentage change in price.
  • Inelastic Demand
    A scenario where the percentage change in quantity demanded is less than the percentage change in price.
  • Unit Elastic
    A condition where the percentage change in quantity demanded equals the percentage change in price.
  • Denominator
    The value used as the base in percentage change calculations, affecting elasticity results.
  • Numerator
    The value representing the difference between new and original amounts in percentage change calculations.
  • Delta
    A Greek symbol used to denote change in a variable, commonly seen in economic formulas.
  • Average
    A method of combining original and new values to create a consistent base for elasticity calculations.
  • Law of Demand
    A principle stating that as price rises, quantity demanded falls, and vice versa, reflecting an inverse relationship.
  • Sensitivity
    The degree to which one variable responds to changes in another, central to elasticity analysis.