Price Elasticity of Demand (PED)

Question 1

What is PED? (Price Elasticity of Demand)

Answer 1

the responsiveness of quantity demanded to a change in price

Question 2

Equation for PED (Price Elasticity of Demand)

Answer 2

% change in quantity demanded/% change in price

Question 3

What is perfectly inelastic (what number?)

Answer 3

zero response of quantity demanded to change in price ; 0

Question 4

What is inelastic? (what number?)

Answer 4

proportionally smaller response of quantity demanded to change in price; less than 1.

Question 5

What is Unitary (what number?)

Answer 5

Equal response of quantity demanded to change in price; 1

Question 6

What is Elastic (what number?)

Answer 6

Proportionally greater response of quantity demanded to change in price; more than 1

Question 7

What is perfectly elastic (what number?)

Answer 7

Infinite response of quantity demanded to a change in price; infinity

Question 8

When to change prices based on demand elasticity?

Answer 8

Increase price when demand is inelastic, while decrease price when demand is elastic.