Demand elasticity measures how sensitive the quantity demanded of a good or service is to changes in its price. If a small price change leads to a large change in quantity demanded, the demand is considered elastic. Conversely, if quantity demanded changes little with price changes, it is inelastic. Factors influencing demand elasticity include the availability of substitutes, the necessity of the product, and consumer preferences. For example, luxury goods often have more elastic demand, while essential items like medications tend to be inelastic, as consumers need them regardless of price fluctuations.