The classic price elasticity of demand is defined as the percentage change in quantity demanded for some good with respect to a one percent change in the price of the good.

For example, if the price of some good goes up by 1%, and as a result sales fall by 1.5%, the price elasticity of demand for this good is -1.5%/1% = -1.5.

Thus, price elasticity measures responsiveness of quantity demanded to changes in price. Price elasticity greater than one is called price elastic, and price elasticity less than one is called price inelastic.

A given percentage increase in the price of an elastic good will reduce the quantity demanded for the good by a higher percentage than for an inelastic good. In general, a necessary good is less elastic than a luxury good.

Price elasticity can be expressed as in the following Printable pdf tutorial.

- 1a. Sample Size Determination-fundamental-I
- 1b. Sample Size Determination-fundamental-II
- 1c. Sample Size Determination: Example
- 2a. Sample Size Determination-Yamane formula
- 2b. Sample Size Determination-Simplified formula
- 3a. What is Power of the test?
- 3b. How to calculate the power of the test?
- 4a. Paried T-test Fundamental
- 4b. Paried T-test Example
- 4c. Z-test Application in Excel
- 5. Bootstrapping example in SAS
- 6. Elasticity: Introduction and SAS Example Applications
- 6. Elasticity: Theory and Application-1
- 6. Elasticity: Theory and Application-2