PED

Price elastic demand : a change in price results ion greater change in

demand

Price elasticity of demand (price elastic) :demand is sensitive to a

change in price (chocolate price goes up and we switch to a substitute
product)

Price inelastic demand : demand is not sensitive to prices changes

Price elasticity of demand

Measure of how responsive demand is to a change in price

As price goes up, demand goes down

As price goes down, demand goes up

Elasticity : how much one variable (demand) changes in response to

another variable (price)

PED FORMULA :

Percentage change in demand/percentage change in price = 100

Significance of PED in terms of implications on price

Businesses want to know how a price change impacts on them

Reasons to change price : competitor pricing , costs of production

PED is good in mass market bcs goods have many subs and a price
change can drive the customer away

Niche markets rely less on having a competitive price as they are

specialised and have less subs

Factors that affect PED :

Income level

Level of price

Time period