Explain price elasticity of demand

Price elasticity of demand shows the responsiveness of the demand of a product to a change in price. This indicates the level of necessity or luxury of that good. For example, a litre of milk would be relatively price inelastic, meaning that if the price increases for a litre of milk, demand would decrease, but by a smaller proportion. A fillet steak, however, would be relatively price elastic as it is a luxury good, which means as the price changes, demand for that product (a fillet steak) would change to a greater extent than the initial price change.

RD
Answered by Rohan D. Economics tutor

2405 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Explain the concept of internal economies of scale and the three stages of returns that can occur when firms increase their factors of production? Graphs maybe used in your answer


What are the characteristics of perfect competition?


What is Opportunity Cost?


How should the UK government go about achieving a balance of payments surplus?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning