- What is Elasticity of demand?
Price Elasticity of Demand is expressed through the following formula:
PED = (%change in quantity demanded) / (% change in price)
- How does it work?
However in some cases if demand for a good is classed as elastic then change in price will have a greater effect on the quantity demanded by consumers.
Simply put, this means that the higher the price, the more sensitive consumers will be to price changes. A high price elasticity suggests that when the prices of certain goods/services rise, consumers tend to buy far less. Yet when the price of those goods and services go down, consumers buy a great deal more.
- Further Reading
Alternatively it would be recommended to contact your professor or teacher if you require further help with the basic understanding of PED.