Briefly define price elasticity of demand Explain how this concept contributes to an understanding of why
Price elasticity of demand Whenever price changes, consumers and producers respond differently. ... Economists use the term elasticity to illustrate the degree of responsiveness. There are several different types of elasticity: Elastic demand, Inelastic demand, Unitarily elastic demand, Perfectly demand and Perfectly inelastic demand. The most important is elasticity of demand, which can also be termed the price elasticity of demand and is sometimes abbreviated to PED. We may define it thus: Price elasticity of demand measures the degree of responsiveness the quantity demanded of a commodity to changes in its price. On the other hand, when the price of a good rises, the quantity demanded will fall.