Price Elasticity of Demand (PED)

Elastic (|E| &gt; 1): Consumers are highly sensitive. A price increase will decrease total revenue.
Inelastic (|E| &lt; 1): Consumers are insensitive (e.g., insulin, gasoline). Price increases will raise total revenue.

Quantifying how quantity demanded shifts when prices are manipulated.

Initial Price ($) New Price ($) Initial Quantity New Quantity

Elasticity Coefficient (|E|)

Interpreting the Coefficient

Elastic (|E| > 1): Consumers are highly sensitive. A price increase will decrease total revenue.
Inelastic (|E| < 1): Consumers are insensitive (e.g., insulin, gasoline). Price increases will raise total revenue.