Price elasticity of demand

Definition

The price-elasticity of demand is defined with the following backdrop:

• The specific good, service, or commodity.
• A certain set of economic actors who are the potential buyers of that commodity.
• An economic backdrop that includes all the determinants of demand other than the unit price of that commodity.

With this backdrop, the price-elasticity at a price $p$ is defined as:

${\frac {pdq}{qdp}}=(dq/dp)/(q/p)$

In other words, it is the ratio of the rate of change of quantity demand with respect to price, to the ratio of quantity to price. Note that the price-elasticity of demand is a number; it has no units and is independent of the units used to measure the price or quantity demanded.

The law of demand says that the price-elasticity of demand is zero or negative at all prices.