Saturday, July 28, 2018

Price Elasticity Of Demand!

The price elasticity of demand is the ratio of the percentage change in quantity demanded to the percentage change in price that caused the quantity demanded to change.This ratio measures the relative responsiveness of quantity demanded to a change in the products products price.
The Price elasticity of demand is calculated as shown below:-
Price elasticity of demand=Percentage change in quantity demanded/Percentage change in price

 From the Law of demand ,We know that price and quantity demanded move in opposite directions.As a result, the price elasticity is always negative(-ve),reflecting the inverse relationship between price and sales.

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