When the price elasticity of demand is less than one, the good is considered to show inelastic demand. The lower the price elasticity of demand, the less responsive the quantity demanded is given a change in price. If the price of an elastic good increases, there is a corresponding quantity effect, where fewer units are sold, and therefore reducing revenue. When the quantity demanded drops to zero with a rise in price, it is said that demand is perfectly elastic. When the price elasticity of demand is greater than one, the good is considered to demonstrate elastic demand. The larger the price elasticity of demand, the more responsive quantity demanded is given a change in price. It is common to simply drop the negative of the quotient. The law of demand states that an increase in price reduces the quantity demanded, and it is why demand curves are downwards sloping unless the good is a Giffen good. It is computed as the percentage change in quantity demanded over the percentage change in price, and it will commonly result in a negative elasticity because of the law of demand. Price elasticity of demand demonstrates how a change in price affects the quantity demanded. If income elasticity is negative, the good is inferior. If income elasticity is positive, the good is normal.The four factors that affect price elasticity of demand are (1) availability of substitutes, (2) if the good is a luxury or a necessity, (3) the proportion of income spent on the good, and (4) how much time has elapsed since the time the price changed.The three major forms of elasticity are price elasticity of demand, cross-price elasticity of demand, and income elasticity of demand.Elasticity is a general measure of the responsiveness of an economic variable in response to a change in another economic variable.

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