Elasticity of demand Flashcards
1
Q
What is price elasticity of a demand
A
Responsiveness of demand to a change in price
2
Q
What’s PED FORMULA
A
PED=%change in quantity demanded / %change in price
3
Q
Will all PEDs be negative
A
Yes
4
Q
Equal to infinity
A
Perfectly elastic = buyers will buy at any price
5
Q
Price elastic
A
Greater than 1
6
Q
Price Inelastic
A
Less than 1
7
Q
Equal to 1
A
Unit elastic
8
Q
Equal to zero
A
Perfectly inelastic
9
Q
Determinants of elasticity of demand
A
The number of substitutes ; time period
10
Q
Formula for calculating revenue
A
Price times quantity
11
Q
What’s the cross elasticity of demand
A
Responsiveness of quantity demanded of one void to a change in price of another
