Question

briefly explain price elasticity of demand and how it is measured

Answer 1

Price elasticity of demand is the responsiveness of the change in quantity when there is a change in price. It is a measure which shows how the consumers react to the quantity they demand when the price of the good changes and all other variables are assumed to be constant

the elasticity of demand varies from perfectly inelastic to perfectly elastic demand.

when the change in price brings no change in the quantity demanded it is inelastic demand. so Ed which is the price elasticity of demand is less than 1. Ed<1

the demand is said to have been elastic when a change in price brings a change in quantity demanded as well usually by a larger amount or percentage ie Ed >1

price elasticity of demand is measured by % change in quantity demanded / % change in price of the good

Ed = $\frac{\partial Q}{\partial P}*P/Q$