The degree of responsiveness of demand to change in the price of goods or produce is referred to as

The degree of responsiveness of demand to a change in the price of goods or produce is referred to as price elasticity of demand. Price elasticity of demand is a measure of how much the quantity of a good or product demanded will change in response to a change in its price. If the quantity demanded changes a lot in response to a change in price, the demand is said to be elastic, and the price elasticity of demand will be high. If the quantity demanded changes only a little in response to a change in price, the demand is said to be inelastic, and the price elasticity of demand will be low. For example, if the price of a gallon of milk were to increase by 50%, and the quantity of milk demanded were to decrease by only 10%, the demand for milk would be said to be inelastic. On the other hand, if the price of a luxury car were to increase by 50% and the quantity demanded were to decrease by 50%, the demand for luxury cars would be said to be elastic. Price elasticity of demand is an important concept in economics, as it helps producers and policymakers understand how consumers will respond to changes in price. It can also help businesses make decisions about pricing strategies, such as whether to lower prices to increase demand or raise prices to increase profits.