# Elasticity

Given quantity of demand $Q(p)$, a slight change in price, $p’=p+\Delta p$, leads to the new demand $Q(p’)$,

$$ \frac{Q(p+\Delta p)}{Q(p)} = \left( \frac{p+\Delta p}{p}\right)^e $$

where $e$ is the so called elasticity of demand. As we could observe, $e$ is usually negative, as higher price usually leads to lower demand.

Note that this is a naive model. There are cases that the whole formula fails. For example, if a demand at a certain price is zero, it indicates that the demand at other prices are also zeros.

Planted:
by Lei Ma;

Similar Articles:

Lei Ma (2023). 'Elasticity', Intelligence, 10 April. Available at: https://intelligence.leima.is/economics/microeconomics/elasticity/.