Elasticity Flashcards
What is elasticity
Elasticity in economics refers to the responsiveness of one variable to changes in another
Give the equation for PED.
Price elasticity of demand = % change in Q.D. / % change in Price
Define price elasticity of demand
measurement of the change in the demand for a product as a result of a change in its price.
what does it mean if PES is greater than 1
the suply of the good is elastic
what does it mean if PES is less than 1
the supply of the good is inelastic
What is the relationship between PES and the responsiveness of business to price changes
A higher PES means that a business is less reponsive to price change
what does PES measure
the amount of good or service that businesses are willing to sell when the price of that good or service changes
what does a high PES indicate
businesses are very reponsive to price changes.
what is the equation for PES
% change in quantity supplied / % change in price
What does PED stand for
Price elasticity of Demand
