The elasticity of demand is the relationship between the percentage change in volume and the percentage change in price. This variation can be elastic or inelastic and normally behaves in a regular way in certain industries or types of products.
Example of elastic demand:
Elastic demand is sensitive to price variations, for example a reduction in the price of air transport or consumer goods such as fruit. The impact of a price reduction detonates sales volume.
Example of inelastic demand:
Inelastic demand is not very sensitive to price variations, for example gasoline, which can go up or down in price and consumption will not vary significantly.
How is it calculated?
Elasticity=Percentage change in Quantity / Percentage change in price.
The Sales Glossary is a compendium of all the most commonly used terminology in sales strategy. Many of the concepts listed here are used when implementing a CRM system or a digital sales funnel, no matter if they are legacy systems or an online CRM. See also our blog that deals with sales techniques, marketing and sales culture.