Price Elasticity of Demand Flashcards

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Flashcards covering key vocabulary and formulas related to Price Elasticity of Demand (PED).

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7 Terms

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Price Elasticity of Demand (PED)

Measures how much the quantity demanded of a good responds to a change in the price of that good.

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Elastic Products

Products where demand is sensitive to price changes; if the price rises, customers will shop around.

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Inelastic Products

Products where demand remains relatively constant regardless of price changes.

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PED Formula

% Change in Quantity Demanded/% change in Price

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% Change Formula

(New - Old) / Old x 100

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Elastic Demand

PED value is greater than 1. Customers are sensitive to price change.

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Inelastic Demand

PED value is less than 1. Customers will still buy the product if the price goes up.