Definition: Elasticity of Demand

Elasticity of Demand - related to price elasticity of demand, "the absolute value of the ratio of the percentage change in quantity demanded to the percentage change in price. For example, the increased price of a good, such as sisal used for fiber, by 10 percent, reduces the amount of sisal demanded by 20 percent, a price elasticity of 0.20/0.10 or 2.0." - source: Economic Development 4th Edition by E. Wayne Nafziger