elasticity of demand

elasticity of demand definition - finance
A measure of buyersÂ’ responsiveness to price changes. Items that have a high elasticity of demand, such as luxury cars and expensive jewelry, are very likely to experience decreasing demand if prices rise. In contrast, goods with inelastic demand are resistant to changing prices. Items with inelastic demand include electricity, heating oil, and groceries.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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