Answer to Question #70042 in Microeconomics for monika
contrast the price elasticity of demand for bottled water and movie ticket
Price elasticity of demand (E) = (% change in quantity demanded)/(% change in price) Bottled water is a commodity of basic necessity, which practically does not have substitutes. It has unitary elastic demand (E=1). Proportional change in price brings about equal change in demand. Movie ticket is a normal good, but is not a necessity commodity. It has many substitute products (ticket to the theater, ticket to the zoo, watching a movie at home etc.) It has highly elastic demand (E>1). Proportional change in quantity demanded is more than a given change in price.