Investor Glossary-demand elasticityInvestor Glossary-demand elasticityInvestor Glossary-demand elasticityInvestor Glossary-demand elasticityInsightful stock market charts - Click here
investor
Categories    # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Demand Elasticity

The HTML to link to this page
 

Demand elasticity, also known as price elasticity of demand, is a concept economists use to measure price sensitivity. In principle, demand elasticity is an economic term defined as the percentage change in quantity demanded, divided by the percentage change in price. Demand elasticity can be expressed graphically through a simplified linear demand curve. On this downward sloping curve demand elasticity can be seen as incremental changes in the quantity demanded (x axis) going in the opposite direction relative to the changes in the price (y axis). Thus, demand elasticity remains a negative value. To simplify the mathematical presentation of demand elasticity, economists drop the negative sign and use only the coefficient. As a result, demand elasticity is expressed as (Ed). Depending upon the responsiveness to price changes, demand elasticity can be elastic or inelastic as described by the angle of the demand curve. The flatter the curve, the more price elastic, while a steeper curve would mean more price inelastic.



Rate this demand elasticity definition...

Learn about investing with the Investor Glossary Term of the Day


Click here for insightful stock market charts. Where is the market headed? The answer may surprise you. Find out
with the exclusive & Barron's recommended charts of Chart of the Day.


Popular Terms: inflation, deferred tax, ex-dividend date, 144a, class C shares, debt service coverage, balance sheet, command economy, stock split, reverse mortgage, wholly-owned subsidiary, average price per share, 1035 exchange, Key Rate Duration, margin rate, VIX, open position, covered put, annual return, per diem, required rate of return, retained earnings, irrevocable trust, risk management, LIBOR, deferred revenue, 401a, in escrow, EBITDA, diluted share, minority interest, FICO score, current ratio, quality assurance, implied volatility, FTSE, APR, dividends payable, labor relations, option premium, cancelled check, stock market close, phantom income, ex-dividend, liquidity ratio, limit order, 1031 exchange, real GDP, Zero Cost Collar


Accounting | Banking | Bonds | Brokers | Economy | Futures | Mutual Funds | Options | Real Estate | Retirement | Stocks | Taxes | Technical Analysis
Investor Glossary | Term of the Day | Suggest a Term | Chart of the Day | Dogs of the Dow
©2004-2016 Investor Glossary - All rights reserved - Terms of Use