Price elasticity of demand (PED) measures the responsiveness of quantity demanded to changes in price. It quantifies the percentage change in quantity demanded resulting from a 1% change in price. PED helps in understanding the sensitivity of consumers to price changes and the impact on total spending on a product. Elastic demand indicates a relatively large change in quantity demanded in response to price changes, indicating that consumers are price-sensitive. Inelastic demand indicates a relatively small change in quantity demanded, indicating that consumers are less sensitive to price changes. PED is influenced by factors such as the availability of substitutes, necessity or luxury nature of the good, and the proportion of income spent on the good. Understanding PED helps in pricing strategies, revenue forecasting, and market analysis.