Price-Elastic Demand

What is Price-Elastic Demand?

Demand is described as price-elastic when the percentage change in quantity demanded is proportionately greater than the percentage change in price that caused it. Demand tends to be elastic where close substitutes are available, where the product is not essential, and where it takes a large share of the customer's income, so a price rise is likely to reduce total sales revenue.

This definition is part of the Marketing chapter in Cambridge O Level Business Studies.

Concepts related to Price-Elastic Demand

• substitutes
• sales revenue
• price sensitivity