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Elasticity of Demand : A measure of how responsive the quantity demanded of a given good is to changes in its price. This is from the video “ Elasticity of Demand

Elasticity of Demand: A measure of how responsive the quantity demanded of a given good is to changes in its price. This is from the video “Elasticity of Demand” in the Principles of Microeconomics course.

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Demand curves slope down. In other words, when the price goes up the quantity demanded goes down, when the price goes down the quantity demanded goes up. Pretty simple. But how much does quantity demanded change when the price changes? When the price goes down, does the quantity demanded increase by a lot or by a little? That's the concept that elasticity is going to help us to understand.


Here's the basic terminology. A demand curve is said to be elastic when an increase in price reduces the quantity demanded by a lot. And similarly, when a decrease in price increases the quantity demanded by a lot. That's an elastic curve. The quantity is changing a lot in response to the price. When the same increase in price reduces the quantity demanded just a little or when the same decrease in price increases the quantity demanded just a little, then the demand curve is said to be inelastic.

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