Price elasticity of demand (PED)

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  • Price elasticity of demand (PED)
    • Is a measure of the relationship between a change in the quantity demanded of a particular good and a change in its price.
    • % in quantity demanded / % in price
      • Elastic
        • A small change in price lead to a big change in demand
          • Luxury goods
        • Greater or equal to 1 is elastic
      • Inelastic
        • A meaningful change in price lead to a small change in demand
          • Goods that are needed for a day to day basis
        • Less than 1 is inelastic
    • Problems
      • Predicting Human behaviour
      • Interpreting data
      • Collecting data
    • Always negative


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