Elasticity concerns responsiveness to changes in price.
Price Elasticity of Demand
PED is defined as the responsiveness of quantity demanded to a change in the price of the good or service. #testanswer
The formula for $Ed$, (as per discovering economics) is $$Ed = \frac{%change \space in \space quantity \space demanded}{% change \space in \space price}$$
An $Ed < 1$ indicates a good that is inelastic, and this is known as the elasticity coefficient - to graph, a relatively steep curve
An $Ed > 1$ indicates a good that is elastic to changes in price - to graph, a relatively flat curve
An $Ed=0$ indicates a good that is perfectly inelastic - to graph, $x=n$
An $Ed=\infty$ indicates a good that is perfectly elastic - to graph, $y=n$
However, what is demonstrated above is the point method; this will give different answers depending on whether we are increasing or decreasing price
An alternative is the midpoint method. The formula goes as follows: $$\frac{\triangle Q}{Q_{av}}\times \frac{P_{av}}{\triangle P}$$
The advantge of this is that the answer does not depend on which price we choose as the starting price.
PED and TR/TE
PED is important in that it has a link with total revenue and total expenditure - $TR(TE)=P\times Q$