Elasticity of demand is a measure of how much the quantity demanded of a good or service changes in response to a change in its price or other factors. It is calculated as the percentage change in quantity demanded divided by the percentage change in price or other factor.

Explanation:

• Elasticity of demand measures the responsiveness of consumers to a change in the price of a product or service. It is a measure of how much the quantity demanded of a good or service changes in response to a change in its price or other factors.

• It is calculated by dividing the percentage change in quantity demanded by the percentage change in price or other factor.

• Elasticity of demand can be classified into three types: elastic, inelastic, and unitary.

• Elastic demand occurs when the percentage change in quantity demanded is greater than the percentage change in price. This means that consumers are very responsive to changes in price, and a small change in price can lead to a large change in quantity demanded.

• Inelastic demand occurs when the percentage change in quantity demanded is less than the percentage change in price. This means that consumers are not very responsive to changes in price, and a large change in price may only lead to a small change in quantity demanded.

• Unitary elasticity of demand occurs when the percentage change in quantity demanded is equal to the percentage change in price. This means that a change in price leads to an equal change in quantity demanded.

• Elasticity of demand can also be affected by other factors such as income, availability of substitutes, and consumer preferences.

• For example, if the price of a product increases and the quantity demanded decreases by a large percentage, the demand for that product is considered to be elastic. If the price of a product increases and the quantity demanded decreases by a small percentage, the demand for that product is considered to be inelastic.

In conclusion, the elasticity of demand is a measure of the rate of change in quantity demanded in response to a change in price or other factors.