PED

• producers should raise the price when the fall in quantity demand is proportionally less than rise in price
• ped elastic is when quantity demanded is proportionally greater than change in price
• ped inelastic is when quantity demanded is proportionally less than change in price
• factors influencing PED

  substitutes

  proportion of income

  luxury ( elastic )

  necessity ( inelastic )

  addictions ( inelsastic )

  time period
• ⬆️time = ⬆️ elasticity
• ⬆️substitutes = ⬆️ elasticity
• ⬆️ income = ⬆️ elasticity
• PED = % change in quantity demanded / % change in price
• perfectly elastic demand= ♾️

  producers are required to sell goods at lowest price and if price is changed there will be no sales and consumers turn to competitors
• perfect inelsastic demand = 0


  change in price has no impact on quantity demanded
• unitary elastic demand

  gain = loss

  change in price level brings no impact on size of revenue
• elastic demand 


  when price lowers quantity increases