Price Elasticity of Demand Flashcards
(7 cards)
1
Q
what is price elasticity of demand?
A
The responsiveness of demand to changes in price
2
Q
what factors must be true for price elasticity of demand to be elastic
A
% change in demand is greater than % change in price
3
Q
what is the equation for PED
A
PED= %change in quantity demanded/%change in price
4
Q
what factors must be true for price elasticity of demand to be inelastic
A
% change in demand is less than % change in price
5
Q
what is true about the elastic value
A
always greater than 1
6
Q
what is the value for unitary elasticity
A
equal to 1
7
Q
what is the value for perfect elasticity
A
equal to 0
