Price Elasticity of demand measures the responsiveness of demand to a change in the price of the product. Alfred Marshall first developed it. From our point of view this is one of the most believed fallacies in economic knowledge, because there is no direct dependence between these variables.
But this relation is real only if there is no change in the perceived value of the product.
We consider the traditional theory an explanation of a particular situation which can not be considered a law.
Considering the Unicist Logical Approach the elasticity of demand, analyzed from the point of view of the supplier, depends on the price and the perceived value of products.
The sole fact of a product being used changes its value. Therefore it is necessary to understand that the “price elasticity of demand” depends on the price and the subjective value that sustains the price. The price elasticity occurs only within the fuzzy set described and defined by the value-price relation.
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NOTE: The Unicist Research Institute was the pioneer in using the unicist logical approach in complexity science research and became a private global decentralized leading research organization in the field of human adaptive systems. It has an academic arm and a business arm.