Price Elasticity of Demand

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15 Terms

1
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PED

Measures the responsiveness in quantity demanded given a change in price

2
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PED Formula

Change in Percentage of Quantity Demanded/Change in Percentage of Price

3
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Percentage Change Formula

Difference/Original x 100

4
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PED always negative or positive

Negative

5
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PED >1

Price Elastic

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PED <1

Price Inelastic

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PED 0

Price Perfectly Inelastic

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PED 1

Unit Price Elastic

9
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<p>What demand is this?</p>

What demand is this?

Perfectly Elastic Demand

10
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<p>What demand is this?</p>

What demand is this?

Perfectly Inelastic Demand

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<p>What elasticity is this?</p>

What elasticity is this?

Elastic

12
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<p>What elasticity is this?</p>

What elasticity is this?

Inelastic

13
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What happens to total revenue when demand is price elastic and price increases

Total Revenue will decrease

14
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<p>What does the red part mean?</p>

What does the red part mean?

Total Revenue lost

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<p>What does the green part mean?</p>

What does the green part mean?

Total revenue gained