Price elasticity measures how demand changes with price; it gauges a firm's pricing power. Investors should examine firms' price elasticity to decide if a product has sustainable profit potential.

Demand elasticity is a phenomenon where demand for a specific good or service changes depending on factors such as how it is priced, whether alternatives are available or local income trends.

The economic concept, which describes consumers’ sensitivity to prices, is a hot topic as inflation soars and executives fret about profits. By Jason Karaian and Veronica Majerol S&P 500 company ...