PED + YED Mindmap
- Created by: B-raa
- Created on: 19-12-19 17:07
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- Ped - Price Elasticity of Demand
- Change in demand% / Change in Price%
- PED = 0
- Perfectly Inelastic
- Demand doesn't change as price changes
- Perfectly Inelastic
- PED = 0 to 1
- Demand is inelastic
- The percentage change in demand is smaller than the change in price
- Demand is inelastic
- PED = 1
- Demand is unit elastic
- The percentage change in demand is exactly the same as the change in price
- Demand is unit elastic
- PED = Greater than 1
- Demand is elastic
- The percentage change of demand is larger than the change in price
- Demand is elastic
- PED measures the responsiveness of demand for a product following a change in its own price
- PED = 0
- YED - Income Elasticity of Demand
- Change in demand% / Change in income%
- YED measures the extent to which the quantity of a product demanded is affected by a change in income
- Luxury goods and services
- Has an income elasticity of more than +1
- Demand rises more than proportionate to a change in income
- E.g. Income increases by 10% and demand increases by 12%
- Inferior goods
- Demand falls as income rises
- Always a negative number
- E.g. the demand for supermarket low-priced foods in a boom will decrease
- Normal goods
- Has an income elasticity of between and +1
- Demand is rising less than proportionately to income
- E.g. Income increases by 10% and demand increases by 4%
- Change in demand% / Change in income%
- Change in demand% / Change in Price%
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