PeD

• Definition of PeD


  The responsiveness of a change in demand to a change in price
• Formula for PeD


  Formula:

  
• Determinants 


  Time Period- Longer time under consideration = more elastic

  Number and Closeness of Substitutes- More substitutes = more elastic

  Proportion of Income taken by Product- Smaller proportion = more inelastic

  Luxury or Necessity- Luxury = elastic, Necessity = inelastic
• Value between 0 to -1

  Inelastic
• Value of -1

  Unitary
• Value of 0


  perfectly inelastic
• Value of infinity 


  Perfectly elastic
• Value between -1 and -infinity

  Elastic