Price Elasticity Flashcards
1
Q
What does it mean when a product is elastic?
A
It means that changes in price for the goods cause substantial changes in their demand or their supply e.g. luxury goods, phones
2
Q
What does it mean when a product is inelastic?
A
It means that changes in price for the goods cause little change in their demand or supply e.g. fuel, milk
3
Q
When is the price elasticity of demand inelastic?
A
When it is less than 1
4
Q
When is the price elasticity of demand elastic?
A
When it is more than 1
5
Q
What is the calculation for price elasticity of demand?
A
% change in quantity demanded / % change in price
