Price Elasticity is a measure of the sensitivity of demand (quantity demanded) to changes in price. It shows how much demand will change in percentage terms when the price changes by one percent.
Demand is elastic if a small change in price leads to a large change in demand (consumers are highly sensitive). Demand is inelastic if a change in price leads to little or no change in demand (e.g., for staple or non-substitutable products). Understanding elasticity is critical for pricing decisions.
