The Price Elasticity of Demand

The price elasticity of demand is people’s responsiveness of quantity demanded (or consumption) when there is a change in price. Identify the determinants of the price elasticity of demand. Explain each one. Determine whether each of the following items is elastic or inelastic: bottled water, gourmet coffee, Apple cell phones, and gasoline. Explain your reasoning. Distinguish between a necessity and a luxury. How are the price elasticity of demand and total revenue related? Why is the price elasticity of demand important to pricing?