Price Elasticity of Demand PED 1.5 / 5 based on 2 ratings ? Economics & Business StudiesMacroeconomic IndicatorsAS Created by: kateCreated on: 15-04-12 17:47 What is price elasticity of demand? Price elasticity of demand is the responsiveness of demand to a change in price. 1 of 6 The formula The way to remember this is like a house in an earthquake. The effect is that the top of the house falls down. The cause is the earthquake underneath. 2 of 6 Effect Change in demand __________ ____________________ Cause Change in price 3 of 6 If the PED = 1 demand is UNIT ELASTIC 4 of 6 If the PED < 1 demand is PRICE INELASTIC (this means that the demand of the product does not change with price, for example bread) 5 of 6 If the PED > 1 demand is PRICE ELASTIC (This means that demand does chnage with price, for example a flat screen T.V) 6 of 6
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