PED

• What is the definition of price elasticity of demand (PED)?

  Price elasticity of demand (PED) measures how responsive the quantity demanded of a good or service is to a change in its price.
• How is price elasticity of demand (PED) calculated?

  PED is calculated as the percentage change in quantity demanded divided by the percentage change in price.
• What is the formula for calculating PED?

  PED = (Percentage change in quantity demanded) / (Percentage change in price)
• If the quantity demanded of a product increases by 10% when its price decreases by 5%, what is the price elasticity of demand?

  PED = 10% / (-5%) = -2
• What does a PED of -2 indicate about demand?

  It indicates that demand is elastic, meaning it is relatively responsive to price changes.
• What are the components needed for the PED calculation?

  The components needed are initial quantity, new quantity, and percentage change in price.
• What is the initial quantity and the new quantity in the given problem?

  Initial quantity: 1300 units, New quantity: 1495 units.
• How do you calculate the percentage change in quantity demanded?

  Percentage change in quantity = (Change in quantity / Original quantity) × 100.
• If the original quantity demanded was 800 units and it increased to 880 units, what is the percentage change in quantity demanded?

  Percentage change = (80 / 800) × 100 = 10%.
• What is the percentage change in price given in the problem?

  The percentage change in price is a 12% decrease.
• How should price decreases be expressed in PED calculations?

  Price decreases should be expressed as negative percentages.
• If a store reduces its prices by 8%, how should this be expressed when calculating PED?

  It should be expressed as -8%.
• How should a price increase of 5% be expressed in PED calculations?

  It should be expressed as +5% or simply 5%.
• What is the formula to calculate price elasticity of demand (PED)?

  PED = (Percentage change in quantity demanded) / (Percentage change in price).
• How would you express a 3% decrease in price in a PED calculation?

  A 3% decrease would be expressed as -3%.
• If the percentage change in quantity demanded is 15% and the percentage change in price is -12%, what is the PED?

  PED = 15% / (-12%) = -1.25.
• What does a PED of -1.25 indicate about demand?

  It indicates that demand is elastic, meaning the percentage change in quantity demanded is greater than the percentage change in price.