Elasticity Flashcards
What is Elasticity?
Elasticity measures the responsiveness of demand to a change in relevant variable - such as price or income.
What is price elasticity if demand?
Price elasticity of demand measures the extent to which the quantity of a product demanded is affected by a change in price?
What can we call Price Elasticity of Demand?
PED
PED formula?
%Change in Quantity Demanded
———————————————-
%Change in Price
How do you know the price elastic?
If the number is greater than 1.
How do you know the price in elastic?
If number is less than 1
If the value of PED is more than 1 what is the interpretation of the elasticity?
Change in demand is more than the change in price.
If the value of PED is less than 1 what is the interpretation of the elasticity?
Change in demand is less than the change in price.
If the value of PED is exactly 1 what is the interpretation of the elasticity?
Change in demand is equal to the change in price