Theme 1 - PED

Question 1

What is price elasticity of demand

Answer 1

PED measures how demand changes in response to a change in price

Question 2

Elastic

Answer 2

This means that as price changes, the demand for it changes as-well, for example if prices rise, demand falls

Question 3

Inelastic

Answer 3

This means that as prices change, demand remains the same

Question 4

Formula for PED

Answer 4

% change in price
———————————————— x 100
% change in quantity demanded