Firstly, I explain to you what does Elasticity of demand mean. Price elasticity of demand is how many people consumes and change price.
Secondly, i will tell you about calculate PED. It is `Percentage change in quantity demanded divided by the percentage change in price`.
I explain to you understanding values for price elasticity of demand.
1 If Ped = 0 it's mean that it is perficly inelastic.
2If Ped > 1 it's mean that it is elastic.
3 If Ped > ~ it's mean that it is infinity.
1 comment:
Price elasticity of demand is how many people consumes and change price.
Actually it is not a right definition. "PED is the responsiveess of change in demand to achange in price." This is better definition.
And you also didn't mentioned about inferior and normal good.
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