Why it matters
A price change affects both revenue per sale and the number sold. Elasticity helps describe that response without confusing pounds, litres and units.
A worked example
Using the midpoint method, a price rise from £10 to £12 and quantity fall from 100 to 80 gives elasticity about −1.22. Quantity responds proportionally more than price.
Illustrative example · simplified assumptionsA common mistake
Confusing a steep-looking graph with a comparable elasticity measure.
Where the idea needs care
A price–quantity relationship alone need not identify demand if other factors changed at the same time.
Apply the idea
Explain this concept using a different example from your spending, work, business or a policy debate. State what stays fixed and what could change the result.
Sources and further study
Examples and explanations by Alibomics. Numeric illustrations are not current market quotations.