What advantage does the price elasticity of demand have over the slope of the demand function?

The price elasticity of demand offers significant advantages over the slope of the demand function, particularly in its ability to facilitate cross-product comparisons across different goods. Price elasticity of demand is a unitless measure that tells us how responsive the quantity demanded of a good is to a change in its price. Because it is expressed as a percentage change (percentage change in quantity demanded divided by percentage change in price), it allows for a consistent comparison of the responsiveness of demand for different products, regardless of their specific price points or units of measurement.

This offers a clear benefit over the slope of the demand function, which is sensitive to the specific units of price and quantity, making direct comparisons between different goods more difficult. For example, a steeper slope might suggest inelastic demand for one product but might be misleading if another product has a different price scale, even if both products show similar demand responsiveness. Therefore, the ability of price elasticity to standardize these comparisons enhances its application in economic analyses, making it a more versatile tool for economists and businesses alike.