Explain price elasticity of demand

Price elasticity of demand shows the responsiveness of the demand of a product to a change in price. This indicates the level of necessity or luxury of that good. For example, a litre of milk would be relatively price inelastic, meaning that if the price increases for a litre of milk, demand would decrease, but by a smaller proportion. A fillet steak, however, would be relatively price elastic as it is a luxury good, which means as the price changes, demand for that product (a fillet steak) would change to a greater extent than the initial price change.

Answered by Rohan D. Economics tutor

2172 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Evaluate the case for the introduction of subsidies for agricultural produce. (15 marks)


Comment on whether an increase in saving will reduce inflation


What is the definition of fiscal policy and what are the main differences between an expansionary fiscal policy and contractionary fiscal policy


How and why does price elasticity change along a demand curve?


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences