Price Elasticity Of Demand Flashcards
1
Q
PED
A
Measures how much quantity demanded will respond to a change in price
%change in Qd
————————-
%change in P
2
Q
Is PED positive or negative?
Why?
A
PED is always negative
Price and demand have an inverse relationship
3
Q
Elastic Demand
A
PED= -0 to -infinity
Consumers are very responsive to changes in price
4
Q
Inelastic Demand
A
PED= 0 to -1
Consumers are unresponsive to changes in price
5
Q
Unitary Elastic Demand
A
PED= -1
6
Q
Perfectly Elastic Demand
A
PED= -infinity
Consumers are infinitely responsive to changes in price
7
Q
Perfectly Inelastic Demand
A
PED= 0
Consumers don’t respond to changes in price
8
Q
Factors influencing PED
A
NASBIT
Necessity or Luxury Addiction and habit Substitutability Brand loyalty Proportion of income Time
