Glossary (Body of Knowledge on Infrastructure Regulation)

Price elasticity of demand:: The responsiveness of quantity demanded to changes in price. Calculated by dividing the percentage change in quantity demanded by the percentage change in price; the price elasticity of demand shows how an increase in price will affect total firm revenues; i.e., a value between 0 and -1 indicates an inelastic demand and an increase in total revenue for a price increase; a negative value of more than -1 indicates that total revenue will decrease with an increase in price. See demand elasticity.

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