PED Flashcards
1
Q
What is PED?
A
It measures how responsive quantity demanded is to a change in price
2
Q
What does elastic mean?
A
A percentage change in price will cause a larger percentage change in quantity demanded
3
Q
What does inelastic mean?
A
A percentage change in price will cause a smaller percentage change in quantity demanded
4
Q
What is the PED formula?
A
% change in quantity demanded/ % change in price
5
Q
What value does a good have to be for it to be elastic?
A
PED>1
6
Q
What value does a good have to be for it to be inelastic?
A
0<PED<1
7
Q
Why is PED usually negative?
A
Because demand falls as price increases for most goods.
8
Q
What is unit elasticity?
A
If the percentage change of price is equal to the size of the percentage change In quantity demanded
