Elasticity

The concept of elasticity of demand is very important in economic theory and policy. It is used to measure the effect of changes in price on quantity demanded. It is known that according to the law of demand, if price decreases the demand increases and if price increases the demand falls. The quality of demand to change with changes in price is called the elasticity of demand.
By definition, then, the elasticity of demand is the rate at which the quantity demanded changes in response to a change in price.
According to http://www.pitt.edu/~upjecon/MCG/MICRO/ELAS/Elasticity.html ,its formula is:
Ed = percentage change in quantity demanded/percentage change in price.This rate of change in demand varies according to commodities, market and consumers. At times a small change in prices has a big effect of demand. This phenomenon is called elastic demand. This effect is usually seen when consumers have more buying options. There are also situations when a large change in price has a small effect of demand. This is called inelastic demand. Commodities like basic food items like salt tend to show inelastic demand.