Price elasticity
... This concept can be explained by price elasticity. Price elasticity refers to how a price change affects a company’s change in sales and profit. It is the measure of the magnitude by which consumers change the quantity of some product they purchase in response to a change in the price of that product. The more elastic demand is, the more reactive consumers are to any change in the price. ... Price elasticity of demand can be greater than 1, which makes the price elastic. When the elasticity of demand is less than 1 the price is said to be inelastic. It is useful to learn about perfectly elastic products and perfectly inelastic products to understand the concept of elasticity. When a product is perfectly elastic, any change in price will result in zero quantity demand. ... One small farmer cannot change the price of his product because he is just one of many wheat producers.