Price elasticity of demand

In economics, the price elasticity of demand measures the responsiveness of
the quantity demanded of a good to its price.

It is measured as the percentage change in demand that occurs in response to
a percentage change in price. For example, if, in reponse to a 10% fall in
the price of a good, the quantity demanded increases by 20%, the price
elasticity of demand would be 20%/-10% = -2.

In general, a fall in the price of a good would be expected to increase the
demand, so we would expect the price elasticity of demand to be negative as
above. Note that in the economics literature the minus sign is often omitted.

It may be possible that demand for a good rises as its price rises, even
under conventional economic assumptions of consumer rationality. Two such
classes of goods are known as Giffen goods or Veblen goods.

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