The price elasticity of demand measures the degree of responsiveness of quantity demanded for a certain commodity to the change in its price. In other words, the price elasticity of demand is defined as the ‘ratio of percentage change in the quantity demanded to the percentage change in price. It can be expressed as follows: Price elasticity of demand (ep) = Percentage change in quantity of demand / Percentage change in price Where, ep = Coefficient of price elasticity of demand. The price elasticity of demand is always negative due to the inverse relationship between the price and quantity demanded. But for the sake of simplicity in understanding the magnitude of response of quantity demanded to the change in the price we ignore the negative sign and take into account only the numerical value of the price elasticity of demand. Types of Price Elasticity of Demand There are five types of Continue reading