In determining the significance of elasticity it is important to look at the results of a price change on total revenue The following matrix is useful in analyzing problems that consider the responsiveness of consumers to price changes. It also reminds one that elasticity does not defy the law of demand; it measures the direction of change of total revenue or expenditure in response to changes in price.

Price	Quantity Demanded	Total Revenue	Elasticity
UP ↑	DOWN ↓	UP ↑	INELASTIC
UP ↑	DOWN ↓	DOWN ↓	ELASTIC
UP ↑	DOWN ↓	no change	Unit Elastic
DOWN ↓	UP ↑	UP ↑	ELASTIC
DOWN ↓	UP ↑	DOWN ↓	INELASTIC
DOWN ↓	UP ↑	no change	Unit Elastic

• The arrows indicate the direction of change for price, quantity demanded, and total revenue or expenditure.
  
• The change in price and quantity always goes in opposite directions (the law of demand).
  
• When the change in price and total revenue goes in the same direction, the demand is inelastic.
  
• If the change in price and total revenue goes in opposite directions, the demand is elastic.
  
• If the price changes and there is no change in total revenue, the demand is unit elastic.

The rationale for the above table is straightforward, and with all concepts in economics, it always helps to think of a sentence that explains each possible scenario.
For example: If the price of Ipods goes and Apple still makes more money, then obviously demand for Ipods is inelastic, since the increase in price apparently didn't scare away many consumers!

The main determinants of the elasticity of demand for a good or service are:

S - The number of substitutes available. More substitutes, more elastic demand.
P - The proportion of income the good requires to purchase. Higher the proportion, higher the elasticity of demand.
L - Luxury or necessity? The more necessary the item, the less elastic demand.
A - If a product is addictive or habit forming, demand tends to be less elastic
T - The amount of time a consumer has to respond to the price change