PED

• What is PED?


  It measures the degree of responsiveness of demand to changes in its price
• PED= (%change in Qd of x)/(%change in price of x)
• Factors affecting PED:

  • No. of close substitutes
  • Strength of brand loyalty
  • Degree of necessity for consumers
  • Time frame available for consumers
  • Habitual demand
  • Price of a product
• PED>1?


  Elastic Demand
• PED<1?


  Inelastic Demand
• PED=1?


  Unit Elasticity
• PED=0?


  Perfectly Price Inelastic
• PED=infinity?


  Perfectly Price Elastic