PED Flashcards
1
Q
What is PED?
A
It is the responsiveness of the qd of a good to a change in the price of a good.
2
Q
What are the determinants of PED
A
Availability and accessibility of subsitutes, proportion of income spent on good, time period, type of good whether it is a necessity, habitual consumption
3
Q
Why may using PED not be reliable?
A
They are estimations,ceterius paribus assumption may not uphold,they are calculated based on past data so may not be good indicators of the future.
4
Q
What is elastic PED?T
A
This is when the qd of a good is proportioanlly more responsive to a change in price.
