The economic significance of demand price elasticity is that demand price elasticity is an index to measure the relationship between price change and demand change in economics, which can quantitatively describe the reaction degree of relative change in demand for a commodity to relative change in price in a certain period. Mathematically, price elasticity is expressed as the reciprocal of the ratio between the relative change of demand and the relative change of price.

The price elasticity of demand is actually negative; That is to say, due to the law of demand, prices and demand change in reverse, prices fall and demand increases; As the price rises, the demand decreases. Therefore, the relative changes of demand and price are opposite in sign, so the elasticity coefficient of demand price is always negative.

Factors affecting the elasticity of product demand

(1) The importance of products to people's lives. Usually, the demand elasticity of daily necessities is small, and the demand elasticity of luxury goods is large.

(2) Commodity substitution. The elasticity of demand for goods that are difficult to replace is small, and the elasticity of demand for goods that are easy to replace is large.

(3) How many uses does the product have? The demand elasticity of single use is small, and the demand elasticity of wide use is large.

(4) the popularity of the product. The demand elasticity of products that have been popularized and saturated by society is small, and the demand elasticity of products with low popularity is large.

(5) the unit price of the product. The demand elasticity of daily necessities with small unit price is small, and the demand elasticity of high-end consumer goods with large unit price is large.