What is the price elasticity of demand ?

Firstly, the demand of a consumer for a certain good or service is the willingness to pay the price for that good/ service in order to be considered in the market demand. The price elasticity of demand refers to how much the demand for a certain good/service will change as the price of that good/service changes. For example, if the price of eggs increase by 10% and the demand decreases by 5%, it means that demand for eggs is inelastic as the demand increase was less than the price increase, which determines that the demand for eggs is not that sensitive as it is also a necessity for many households and any increase in the price will not have a big influence in the demand. The formula to calculate the price elasticity of demand is => (% change of quantity demanded)/(% change of the price). If the result that you get is less than 1 the demand of the good is considered to be price inelastic and vice versa. Finally, good that have substitutes are more likely to have a sensitive demand (>1 elasticity) as if the price of that good increases the % change in the demand will be higher (you can see that also by the formula) as the consumer will seek for the substitute that has a more competitive price.