How is the price elasticity of demand typically represented?

The price elasticity of demand is represented as a ratio that measures the responsiveness of the quantity demanded of a good to a change in its price. Specifically, it quantifies how much the quantity demanded will change in percentage terms for a given percentage change in price. This ratio is calculated by taking the percentage change in quantity demanded and dividing it by the percentage change in price.

This concept is essential because it provides valuable insights into consumer behavior and helps businesses and policymakers understand how changes in price can impact overall demand for a product. For instance, if the price of a good decreases and the quantity demanded increases significantly, this indicates high elasticity. Conversely, if the quantity demanded changes little in response to a price change, the demand is considered inelastic.

Other representations mentioned, such as horizontal or vertical lines, pertain to specific conditions in demand elasticity. A horizontal line suggests perfectly elastic demand, while a vertical line indicates perfectly inelastic demand. Shifting curves with income changes relate more to changes in demand due to factors other than price, not the direct measurement of elasticity itself.