Can price elasticity of demand change over time?
First of all, let's just clarify that for common goods (with
For example, if water prices doubled or halved people would not demand more or less water substantially enough to deeply change market supply/demand equilibrium. The same with goods that are essential in some quantity and rarely more or less than in that quantity. So, this price elasticity of demand - the one for common goods - sounds pretty unchangeable through time.
However, things start to differ when we deal with inferior goods or luxury goods, which price elasticity has an absolute value superior to 1. We may think, at first, that price elasticity of demand is a given relation, that stays fixed, but it actually can - also by the definition of demand itself - change.
We must bear in mind that demand, in theoretical and mathematical terms, is function of the price of the good, the price of other good(s) and also of income, as exemplified by the formula
Last but not least, we must also understand "who" is the demand we're talking about? Is it an individual/company alone? Is it a group, a class? Is it the whole market? The greater the span, the more subtly changes will take place.
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