Elasticity Flashcards
1
Q
What is elasticity of demand ?
A
How responsive demand is to a price change
2
Q
What is the equation for elasticity of demand ?
A
%change in demand / %change in price
3
Q
What does a value greater than one mean in PED ?
A
Change in demand is greater than the change in price ( elastic )
4
Q
What does the value = 1 mean in PED ?
A
Demand changes in line with price
( unit elastic )
5
Q
What does the value less than 1 mean in PED ?
A
Change in demand is less than price ( inelastic )
6
Q
A
