1.2.3 PED Flashcards
1
Q
Define PED
A
the measure of responsiveness of quantity demanded of a product to a change in its price
2
Q
What is the calculation for PED?
A
% change in quantity demanded/ % change in price
3
Q
What value will PED always have?
A
negative
4
Q
What value does elastic demand have? why
A
the value is greater than 1
a change in price will have a large impact on the quantity demanded
5
Q
What value does inelastic demand have?
A
the value is smaller than 1
a change in price will have a small impact on the quantity demanded
6
Q
what value does perfectly elastic have?
A
infinity
7
Q
what value does unitary elasticity have?
A
1
8
Q
what value does perfectly inelastic have?
A
0
9
Q
What factors affect PED?
A
- availability of substitutes
- proportion of income spent on the product
- nature of the product
- durability of the product
