price elasticity of demand
. This
is a measure of consumer behaviour based on economic theory that indicates the change in
demand for a product or service in response to changes in price. Price elasticity of demand
is determined by the price of the product, availability of alternative goods from alternative
suppliers (which tends to increase online) and consumer income. A product is said to be
‘elastic’ (or responsive to price changes) if a small change in price increases or reduces the
demand substantially. A product is ‘inelastic’ if a large change in price is accompanied by a
small amount of change in demand. More details on price elasticity of demand are given in
Box 8.4.
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