Price elasticity of demand Flashcards
1
Q
Description of price elasticity of demand:
A
We wish to measure the impact of a change in the price on the quantity demanded. How sensitive or responsive the quantity demanded is to the change in price.
2
Q
Empirical economics:
A
Measure by how much the price decreases and by how much the quantity demanded increases.
3
Q
Price elasticity coefficient:
A
Price elasticity = %change in quantity demanded / %change in price
4
Q
Percentage change in price and percentage change in quantity demanded:
A
Difference in price / Original price * 100
