price elasticity of demand

inelastic good

doesnt have any or many substitutes, necessity good, higher price=higher revenue

elastic good

has substitutes, not a necessity, lower price=higher revenue

time period considered

it takes time for consumers to adjust their buying habits, more inelastic in the short term

necessity of the product and how widely it is defined

more widely defined, more inelastic

perfectly inelastic

unresponsive to price change,

definition of price elasticity of demand

percentage change in quantity demanded -------------------------------------------------------- percentage change in price

unit elastic

percentage change in quantity demanded is the same as the percentage change in price

the number and closeness of substitutes

the more and close substitutes, the more elastic the good

determinants of price elasticity of demand

the number and closeness of subsitutes, necessity of product and how widely it is defined, time period considered