**Questions you will be able to answer:**

- What impact does price have on demand?
- How can we measure the impact a price increase or decrease will have on demand?
- How can decision makers use this information?

**Elasticity of Demand**

Coefficient of demand = (% change in demand / % change in price)

Inelastic demand: Coefficient of demand < 1

Elastic Demand: Coefficient of demand > 1

Unitary Demand: Coefficient of demand = 1

**Additional Practice and Review**

Read Pages 95-97

Check Your Understanding 1-4