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Price Elasticity of Demand
Price Elasticity of Demand
The responsiveness of quantity demanded to the changes in price. It also known as the sensitivity to
price changes that the consumers react. The value for PED is negative because as price increases,
quantity demanded does the opposite and falls.
The percentage change in quantity demanded is greater the percentage change in price. This will be the
base for goods and services where consumers do not change their demand much if the price changes.
For example, the price of petrol increases $10 to $15, this leads
to the fall in QD from 500 to 450.
For example, the price of cars is 65 thousand and it increase to 65 thousand per car. The increase in car
leads to the changes in QD from 110 to 50. The total revenue had decrease.
Special PED
1. Unit elastic demand – the percentage change in quantity demanded is the same to the
percentage change in price.