elasticity of demand

Definition

A measure of how much the demand for a good or service increases or decreases in response to changes in price. A necessary good such as water or a service such as medical care might have low elasticity, since demand for such goods and services remains relatively stable at nearly any price.

Use this term in a sentence

My boss likes being a supplier of gasoline because he believes people will buy it regardless of the price and it has low elasticity of demand.

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You need to know what the elasticity of demand on your product is and adjust accordingly to it at all times.

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The elasticity of demand for the Wii U electronic gaming system has increased due to the rise and demand of games out side of the country.

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elasticity of an option inferior good