In economics, what measure compares the percentage change in quantity demanded with the percentage change in price?

In economics, price elasticity of demand compares the percentage change in quantity demanded with the percentage change in price.

It measures how sensitive buyers are to a product’s own price. The standard calculation divides the percentage change in quantity demanded by the percentage change in price. Because price and quantity demanded usually move in opposite directions, the result is commonly negative, although textbooks often discuss its absolute value.

Demand is called elastic when quantity responds by a larger percentage than price, and inelastic when it responds by a smaller percentage. Unitary elasticity means the percentage changes are equal in magnitude.

The measure differs from income elasticity, which uses income as the changing variable, and cross-price elasticity, which uses the price of another good. Time, substitutes, and budget share can all affect responsiveness.