Elasticity- It tells how drastically buyers that cut back or increase the demands for a good when the price rises or falls.

Elastic demands: when demands will change greatly given a small change in price.

Ex. "Wants:" movie tickets, steaks, fur coats

Inelastic demands: your demands for a products will not change regardless of price.

Ex. "Needs:" milk, gasoline, medicine 

Unit elastic: E=1 

Problem reviews 

1. new quantity-old quantity divided 

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old quantity. 

2.new price-old price divided 

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old price 

3.PED %change in quality divided 

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% change in price