The price elasticity of demand is a calculation that measures how demand for a product or service varies after a change in price.
For example, a gym raises its monthly membership fee from $45 to $55 and sees membership drop from 400 to 360 members. The price elasticity of demand is calculated as (-10% ÷ +22%) = -0.45, indicating relatively inelastic demand — members are not highly sensitive to this 22% price increase.
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