Price Elasticity of Demand (PED) Flashcards
1
Q
What is PED
A
Price Elasticity of Demand is the responsiveness of demand for a good or service to a change in its price (measured as a numerical value greater then 0)
2
Q
What is the PED equation
A
% change in quantity demanded /
% change in the price of good
3
Q
why is PED always a positive number
A
PED is always positive, so + or - signs in the final equation is irrelevant.
4
Q
What does the PED graph look like
A
relatively elastic - downward sloping (low gradient)
relatively inelastic - downward sloping (high gradient)
has price on y-axis and quantity on x-axis
