LS12 - Price Elasticity Of Demand Flashcards
1
Q
Price Elasticity Of Demand
A
Measures the responsiveness of demand given a price change.
2
Q
Price Elastic
A
When a price change causes a larger change in demand.
3
Q
Price Inelastic
A
When a price change causes a smaller change in demand.
4
Q
Determinants Of PED
A
S - No Of Substitutes P - Proportion Of Income Spent On Product L - Luxury/Necessity A - Addictiveness T - Time
5
Q
Price Elasticity Of Demand Equation
A
Percentage Change In Quantity Demanded/Percentage Change In Price
6
Q
Percentage Change
A
(New - Original)/Original x 100
7
Q
PED>1
A
Price Elastic
8
Q
0
A
Price Inelastic
9
Q
PED Elastic Curve
A
Shallower curve because quantity demanded changes as price does
10
Q
PED Inelastic Curve
A
Steeper curve because quantity demanded doesn’t change as much as price does.
