Elasticity of Demand

The degree to which demand for a good or service varies with its price. Normally, sales increases with drop in prices and decrease with rise in prices. As a general rule, appliances, cars, confectionery and other non-essentials show elasticity of demand whereas most necessities like food, medicines, basic clothing show inelasticity of demand. Elasticity of demand is also called as Price Demand Elasticity.

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