What is price elasticity?

Price elasticity describes the way that consumer demand changes as prices change for a particular good or service. If the price on a particular product drops, consumers might be willing to buy more of it, causing demand to rise. If the price rises, they might be less willing to buy it and so demand would drop. Price elasticity is the term that describes these changes as a whole. Not all goods and services are elastic, however. There are some goods that have a fairly constant demand, even when the price changes. For example, gasoline is inelastic. The price of gasoline changes constantly, but the demand stays fairly steady because people still need to drive even when gasoline is at a higher price.