# The Price Elasticity of Demand

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The price elasticity of demand is defined by , where is the price and is the quantity demanded. The price elasticity is a measure of how sensitive the quantity demand is to changes in the price.

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Contributed by: Sarah Lichtblau (March 2011)

Open content licensed under CC BY-NC-SA

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The point elasticity refers to elasticity between two points on the demand curve, not the derivative of the demand curve at a point. The arc elasticity method is also known as the midpoint method.

Note that if , can be greater than , which is not possible in the real world.

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