Price elasticity of demand = % change in quantity demanded / % change in price

If the quantity demanded of a good or service decreases significantly in response to a small increase in price, then the demand is said to be price elastic (i.e. responsive to price changes). PED> (-) 1

If the quantity demanded only decreases slightly in response to a large increase in price, then the demand is said to be price inelastic (i.e. not very responsive to price changes). (PED < (-) 1