elasticity of demand curve

The elasticity of demand measures how sensitive the quantity of a product people want to buy is to changes in its price. If demand is elastic, a small price increase causes a big drop in quantity demanded; if inelastic, a price change has little effect on demand. For example, luxury items tend to have elastic demand, while essentials like medicine are inelastic. Understanding this helps businesses decide how much they can raise prices without losing customers, and how consumers might respond to price changes. It’s a key concept in economics that explains consumer behavior relative to pricing.