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Elasticity of demand

Definition: [crh] The degree of buyers' responsiveness to price changes. Elasticity is measured as the percent change in quantity divided by the percent change in price. A large value (greater than 1) of elasticDefinition: ity indicates sensitivity of demand to price, e.g., luxury goods, where a rise in price causes a decrease in demand. Goods with a small value of elasticity (less than 1) have a demand that is insensiDefinition: tive to price, e.g., food, where a rise in price has little or no effect on the quantity demanded by buyers.

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