Answer to Question #104388 in Macroeconomics for Nartey Apau Edward

Question

Explain the usefulness of Price Elasticity

Answer 1

Price Elasticity shows how income changes when prices change.

Price elasticity is the speed and degree of price reaction to any changes in the ratio of supply and demand of goods.

An elastic price means that it rises if demand exceeds supply for a particular product (service), and decreases if supply exceeds demand.