PED Flashcards
1
Q
PRICE ELASTICITY OF DEMAND
A
measures how demand for a product changes in response to a change in price.
2
Q
PED formula
A
%change in quantity demanded/%change in price
3
Q
percentage change formula
A
new-old / old * 100
4
Q
elastic demand
A
a small change in price leads to a smaller change in quantity demanded
luxuries
5
Q
inelastic demand
A
a large change in price leads to a small change in quantity demanded
necessities - salt
PED is less than 1
6
Q
unit elastic demand
A
a change in price leads to a same change in quantity demanded
normal demand curve
PED=1
any change in the price of a good leads to an equally proportional change in quantity demanded
