Price elasticity of demand

Question 1

what is PED/ what does it measure

Answer 1

it measures the responsiveness of a change in quantity demanded to a change in price

Question 2

equation for PED

Answer 2

(% change in QD/ % change in p) you have to queue before you pee

Question 3

different types of elasticity

Answer 3

• > 1 elastic
• <1 inelastic
• 0 perfectly inelastic vertical
• infinity perfectly elastic horizontal
• 1 unit price elastic

Question 4

what determines PED

Answer 4

-s: no. of substitutes, more substitutes more elastic
- percentage of income, greater the percentage, greater elasticity
-luxury (elastic)/ necessity (inelastic)
-Time period: short run= inelastic, long-run = elastic