explain what is price elasticity of demand (PED)

answer structure: definition, equation/ graphs, explanationdefinition: PED measures the responsiveness of demand for a product to a change in its own priceequation: change in demand %/ change in price % (think: for each dollar increase in price, how much does demand fall)explanation: PED=0: demand is perfectly inelastic (graph: vertical demand curve), demand does not change when price changesPED=0-1: demand is inelastic (graph: flat demand curve)PED=1: demand is unit elastic (graph: slope of demand curve as 45 degrees), eg 15% increase in price leads to 15% fall in demandPED>1: demand is elastic (graph: steep demand curve), eg 15% increase in price leads to 30% fall in demand

HC
Answered by Hue C. Economics tutor

2497 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What is the impact of technological advances on a market?


Explain how a decrease in interest rates affects real GDP and inflation. When may a decrease in the interest rate not affect real GDP?


Explain a few problems the UK economy has endured or is expected to endure as a result of the Brexit Referendum.


What measures could the government take to boost aggregate demand?


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