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Elastic demand, inelastic demand etc
PED
Price elasticity of demand
PED Formula
% Quantity demand / % Price
causes of Inelastic demand
Product that has very few substitutes, meaning change in price results in a small change in quantity.
Elasticity of demand coefficient
% change in quantity / % change in price
Elastic demand
A demand with a lot of substitutes or is a luxury
Elastic of a demand coefficient
% change in Q / % change in P
Graph above
When price goes up. Quantity demanded goes down by just a bit because inelastic quantity is insensitive to a change in price.
Graph above
When price goes down. Quantity demanded goes up by just a bit because inelastic quantity is insensitive to a change in price.
Graph above
Means an increase in a price has no affect on quantity.
Graph above
Means if a firm changes the price no one will buy.
What are elastic and inelastic demands?
Elastic demand >1, quantity changes more than price.
Inelastic demand <1, quantity changes less than price
Income Elasticity
%change in quantity / %change in income
Note 
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