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Price Elasticity of Demand Eco 203- 27 Victoria P. Panna October 13, 2003 Principals of Microeconomics Table of Contents I. Overview II. Changes in Price and Quantity Demanded i. Consumer Responsiveness to Price Changes ii. Calculating the Coefficient of Price Elasticity iii. Elastic Versus Inelastic Demand iv. The Difference between Price Elasticity and Slope v. Point Elasticity III. Determinants of Price Elasticity of Demand vi. Available Substitutes vii. Cost of the Good Relative to Total Income viii. Time and the Availability of Substitutes ix. Luxuries Versus Necessities IV. Price Elasticity and Total Revenue x. Price Discrimination V. Price Elasticity and the Incidence of a Tax VI. Summary VII. Definitions VIII. Appendex IX. Works Cited Overview Three important characteristics of determining demand are the relationships between market price, quantity, and demand and consumer expenditure. To predict consumer behavior, economists use well-defined techniques evaluating the sensitivity of consumers to changes in price. The most commonly used measure of consumers' sensitivity to price is known as price elasticity of demand. Price elasticity of demand is the change in quantity...

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