Economics Unit 1

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Elasticity of demand

Price elasticity of demand measures the responsiveness of demand after a change in price

PED = % change in demand/ % change in price

PED = 0 , demand is perfectly inelastic - demand does not change at all when price changes

PED is between 0 and 1 , demand is inelastic

PED = 1 , demand is unit elastic

PED is greater than 1 , demand is elastic

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