What is demand elasticity?
Elasticity is an indicator used by economists to measure how much the consumption of a good or service changes in response to a change in some other factor, such as income, population, or the price of the good. One of the most common elasticity measures used in transportation planning is the price elasticity of demand, often called “demand elasticity.” Demand elasticity is defined as the percentage change in the quantity demanded for a good, divided by the associated percentage change in the price of the good. For example, a demand elasticity value of -0.5 means that a 10 percent decrease in the price of a good will result in a 5 percent increase in demand for that good. Demand elasticity usually has a negative sign to indicate that demand increases when the price goes down. The magnitude of demand elasticity depends heavily on the scope and time frame over which travel demand is being measured. For example, a demand elasticity measured with respect to a single facility includes trips
