Coefficient of Elasticity


The concept describes the importance of understanding the price elasticity of demand. The concept explains how the quantity demanded of a good or service responds to a change in the price of that good or service and provides case studies of organisations that apply the coefficient of elasticity to perform better.

Technique Overview

Coefficient of Elasticity

Coefficient of Elasticity Definition

Elasticity is a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants. Economists usually refer to the coefficient of elasticity as the price elasticity of demand, a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in the quantity demanded divided by the percentage change in price. Other coefficients of elasticity may relate to 'income elasticity of demand', 'cross-elasticity of demand', or the 'elasticity of supply' (Andreyeva, 2010; Mankiw, 2009).

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Business Evidence

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Business Application

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Further Reading

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Coefficient of Elasticity References (4 of up to 20) *

  • Anderson, C. (2005), The Zen of Jeff Bezos, Wired, 13.01, available at: http://www.wired.com/wired/archive/13.01/bezos.html
  • Andreyeva, T., Long, M., and Brownell, K. (2010) The Impact of Food Prices on Consumption: A Systematic Review of Research on the Price Elasticity of Demand for Food, American Journal of Public Health, 100 (2), pp. 216-222.
  • Arnold, R. A. (2013) Microeconomics, South-Western College Publishing.
  • Ball, J. (2006), As Gasoline Prices Soar, Americans Resist Major Cuts in Consumption, The Wall Street Journal. May 1st.

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