Last updated on June 13th, 2020 at 08:31 pm

**Price elasticity of demand measures the quantitative response of demand to a change in price. This is the ratio of percentage change in demand to the percentage change in price. So the price elasticity of demand is,**

__Price Elasticity of Demand :__Here,

*e*_{p}_{ }= price elasticity of demand ΔQ = change in quantity

ΔP = change in price

P = Initial Price

Q = Initial Quantity

Here in the above given equation a negative sign has been used as the relation of price and demand is negative. So to avoid negative values the negative sign has been introduced.

**Considering the price of X commodity is falling to $80 from $100 and the demanded quantity is rising to 3000 units from 1000 units. Thus,**

__Example :__ P = 100$ Q = 1000 units

ΔP =-20$ ΔQ =2000 units

The price elasticity of demand,

Thus, the price elasticity is 100.