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Flashcards covering key vocabulary and formulas related to Price Elasticity of Demand (PED).
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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.
Elastic Products
Products where demand is sensitive to price changes; if the price rises, customers will shop around.
Inelastic Products
Products where demand remains relatively constant regardless of price changes.
PED Formula
% Change in Quantity Demanded/% change in Price
% Change Formula
(New - Old) / Old x 100
Elastic Demand
PED value is greater than 1. Customers are sensitive to price change.
Inelastic Demand
PED value is less than 1. Customers will still buy the product if the price goes up.