Elasticity

Price elasticity of demand (PED)

measures how sensitive the quantity demanded is to changes in the price
ELASTIC:
As P increases by 100%, Q decreases by >100%.
Have many substitutes

(http://img.sparknotes.com/figures/5/5259b727009a2736d6ad639bab3494ff/elastic.gif) (http://www.personal.psu.edu/~dxl31/econ102/elastic.png)
INELASTIC:
As P increases by 100%, Q decreases by <100%.
Have few substitutes.

(http://i.investopedia.com/inv/tutorials/site/economics/economics13.gif) (http://www.personal.psu.edu/~dxl31/econ2/Spring_2000/inelastic.gif)

|PED| > 1 . elastic
|PED| = 1 . unitary elastic
|PED| < 1 inelastic
PED > 0 . Giffen good
Revenue and different elasticities
Elastic demand: increase quantity
Inelastic demand: increase price.
Unitary elasticity: change nothing.