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Price elasticity of demand, one of the most powerful concepts in economics that determines which businesses can survive price increases and which ones can't.

Price elasticity measures how much demand changes when prices change.

It's calculated as: % change in demand ÷ % change in price

INELASTIC DEMAND: People buy almost the same amount even when prices increase because the are no good substitutes and it is absolute necessity

Ex: Gasoline, electricity, water, insulin, salt

ELASTIC DEMAND: People buy much less when prices increase because cheap alternatives exist.

Ex: Coffee shops, restaurants, luxury goods, entertainment

If you sell an elastic product, you CANNOT raise prices without losing customers