Measures how much quantity demanded will respond to a change in price.
PED Formula
% change in QD / % change in price
Elastic Demand
When PED is between -1 and -infinity, consumers are very responsive to change in price. Flatter slope as any price change will lead to the QD change being bigger.
Inelastic Demand
When PED is between 0 and 1. Consumers very unresponsive to the change in price. Steeper slope because any price change will lead to the QD change being smaller.
Unitary Elastic
When PED = -1, a % change in price will lead to NO % change in QD of the same size.
Perfectly Elastic Demand
When PED = -infinity, when there is a price change, QD = 0 - slope becomes completely horizontal.
Perfectly Inelastic Demand
When PED = 0, QD stays the same even if there is a price change - slope becomes completely vertical.
