Elasticity of demand

Elasticity is an extent to which buyers and sellers are responsive to change in market conditions. There are three elasticities which shows the responsiveness of the quantity demanded to a change in price of the product, that is Price Elasticity of Demand, change in income of consumers, that is Income Elasticity of Demand and change is price of another product, that is Cross Elasticity of Demand. 
Price Elasticity of demand helps to determine which of good is it. If PED is negative and less than 1, this is normal good and demand is not really responsive to a change in price and price is inelastic in this situation. If PED negative and more than 1, this is normal good and demand for it is responsive to a change in price, so price is elastic. If PED is positive, that means that there is a snob good or good of ostentation, that is when consumers’ demand increases as price of the good rises. 
The determinants of PED are:
 the availability of substitutes: if there are any goods that can be alternative for a particular product. Generally, the greater the amount of substitutes, the greater chance that price will be elastic for the product;
the expense of the product with respect to the income: if the product takes a big proportion of income, then it is more likely that price will be elastic for it.
Time: sometimes changes in prices don’t affect demand, because consumers have to have time to understand whether it is still worth buying this good or better to switch on substitutes;
Habits: for some products, such as tobacco or alcohol, price is usually inelastic, because if people are addicted and can’t give up, they will still buy products even if prices rise.

Income Elasticity of Demand also helps to determine the kind of product and often YED is positive which means that good is normal, and as income of consumers increases, demand for this good will also increase. And again if YED less than 1, demand is income inelastic and not responsive to a change in income and if YED more than 1, demand is income elastic. 
Sometimes YED can be negative which means that this is an inferior good and as income rises, demand for this good will decrease. Examples of inferior goods are supermarket’s own-label products or just some cheap products.

Cross elasticity of demand shows the relationship between two different goods and determine whether they are substitutes of complements. Positive XED shows that two products are substitutes: as price of one good rises, demand for another product will rise, e.g. apple and banana. The higher the value of XED, the closer substitutes they are and visa versa. If XED is negative, two goods are complements: if price for one product rises, demand for another product will fall, e.g. petrol and cars.