Price Elasticity of Demand: Four Factors

Strolling through the aisles at the local Boston Store led me to the Jeans department where I was overwhelmed with the selection: Guess, Ralph Lauren, Levi Strauss, Calvin Klein, and others. Which of these products would I purchase and how would the price elasticity of demand impact my decision? The definition of price elasticity is straightforward: "how much the quantity demanded changes when the price changes; the formula written as percent change in quantity demanded divided by the percent change in price" (NetMBA. N.D.). A good is considered elastic (>1) if a price change elicits a greater proportional change in quantity demanded. Inelastic (<1) indicates that a change in price will result in a proportionally smaller change in quantity demanded. Unit elastic (=) will present a roughly proportional change in quantity demanded for a price change.

Four Factors of Influence

Four factors influence and...
[ View Full Essay]