# Price Elasticity Homework Help

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### What is price elasticity?

Price elasticity is an important theory of economics that shows the relationship between demand and price. It offers a precise calculation about the change in price and quality demanded. When a small change in price takes place in large quality demand, the product is termed as elastic. On the other hand, a product is considered inelastic when a large change in price occurs on a small amount quantity demand.

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### Role of price elasticity in business

Businesses assess price elasticity for various products that help them to predict pricing on a particular product. Businesses charge higher prices if the demand for the product is inelastic.

### What are the main factors that affect price elasticity?

• Availability of other alternatives.
• Demand for luxury products.
• Proportion of the customer’s budget consumed by a particular product.
• Demand for a particular product in the long run.
• Temporary or permanent price change.

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