How do you calculate Price Elasticity of Demand

Price Elasticity of Demand (PED) calculates the responsiveness/sensitivity of the quantity demanded of a good or service to a change in price. 

The calculation for PED is therefore: the percentage change in quantity demanded divided by the percentage change in price.

If the resulting number is between 0 and 1, demand is inelastic, in other words it doesn't respond proportionally to a change in price. Inelastic goods often lack obvious substitute goods. Examples include petrol or salt.

If the resulting number is 1 or above then demand is elastic, in other words it responds more than proportionately to a change in price. Elastic goods often have clear substitutes or are non-essential. For example electronics such as TV's and phones could be described as having an elastic PED.

DO
Answered by Daniel O. Economics tutor

16773 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Explain the law of supply and demand and why it is important.


If timber prices fall by 30%, what will be the expected % change in demand for timber in the economy if the Price Elasticity of Demand is -0.5, and explain the effect on revenue for a timber-selling firm.


How can an increase in government spending affect the economy?


What are the main causes of globalisation? (8)


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning