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elasticity of demand

The degree of buyers' responsiveness to price changes. Elasticity is measured as the percent change in quantity divided by the percent change in price. A large value (greater than 1) of elasticity indicates sensitivity of demand to price, e.g., luxury goods, where a rise in price causes a decrease in demand. Goods with a small value of elasticity (less than 1) have a demand that is insensitive to price, e.g., food, where a rise in price has little or no effect on the quantity demanded by buyers. Bloomberg Financial Dictionary

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elasticity of demand elasˌticity of deˈmand also ˌprice elasˌticity (of deˈmand) noun [uncountable]
ECONOMICS the degree to which a change in the price of something leads to a change in the amount of it that is sold or that could be sold if available:

• Economists may have over-estimated the elasticity of demand for electricity.

ˌincome elasˌticity of deˈmand ECONOMICS
the degree to which a change in people's incomes leads to a change in the amount of something that is sold or that could be sold if available:

• a high UK income elasticity of demand for imports, compared with a much lower world income elasticity of demand for UK exports

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elasticity of demand UK US noun [U] (also price elasticity of demand)
ECONOMICS the degree to which the number of products sold changes when the product's price changes: »

The report explains how the elasticity of demand and the nature of production influence the extent to which profits are affected by changes in exchange rates.

See also INCOME ELASTICITY OF DEMAND(Cf. income elasticity of demand)

Financial and business terms. 2012.

Look at other dictionaries:

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