what is the importance of price elasticity of demand 
knowing the price elasticity of demand for goods allows someone selling that good to make informed decisions about pricing strategies this metric provides sellers with information about consumer pricing sensitivity it is also key for makers of goods to determine manufacturing plans as well as for governments to assess how to impose taxes on goods the bottom lineprice elasticity of demand is the ratio of the percentage change in quantity demanded of a product to the percentage change in price economists employ it to understand how supply and demand change when a product s price changes 