Elasticities Flashcards
1
Q
What is the Price Elasticity Of Demand?
A
Measures the responsiveness of demand to change in price. An elastic good would have a large change in demand for a small change in price.
An inelastic good would have small change in demand in response to a large change in price,
If PED=0, good is perfectly inelastic
If PED1, good is elastic
If PED=infinity, good is perfectly elastic.
