PED

Question 1

PED = 0

Answer 1

Perfectly inelastic

Demand does not change

Question 2

PED = 0-1

Answer 2

Demand is inelastic

Smaller change in demand than price

Question 3

PED = 1

Answer 3

Unitary elastic

Same changes in demand and price

Question 4

PED = > 1

Answer 4

Demand is elastic

Demand responds more than proportionately to a change in price

Question 5

Factors affecting PED

Answer 5

• related goods
• type of good (necessity/luxury)
• % income
• time period allowed following a price change
• whether the good is habitually consumed
• Peak and off peak demand
• breadth of definition of a good or service