Price Elasticity Of Demand Flashcards
1
Q
What is price elasticity of demand
A
The degree to which the quantity demanded of a good service is affected by a change in price
2
Q
Formula for price elasticity of demand
A
%change in quantity demand divided by % change in price
3
Q
what is inelastic demand
A
the % change in quantity demanded is less than the %change in price
4
Q
formula for inelastic demand
A
<1, demand curve very steep
5
Q
What is elastic demand
A
The % change in quantity demanded is greater than the % change in price
6
Q
Formula
A
> 1, demand curve is quite flat
7
Q
What is unitary elasticity
A
The % change in quantity demanded is equal to the % change in price
8
Q
Formula
A
PED=1
9
Q
Influences on inelastic demand
A
- branded or trademarked
- usp
- need not want
- small % of income
- short term, can’t find substitutes
10
Q
Influences on elastic demand
A
- unbranded, no brand recognition
- lots of substitutes
- luxury
- large % of income
-Long term
