Price elasticity of Demand

• PED formula = % change in quantity demanded / % change in price
• Factors influencing PED = Availability of substitutes, type or nature of a product, income, price, and time.
• PED = Price Elasticity of Demand is a measure of how responsive demand is to a change in price. If PED is greater than 1, the good is price elastic. If PED is smaller than 1, the good is price inelastic. If PED is equal to 1, the good has unit elasticity.
• Significance of PED = Helps with pricing strategies, revenue maximisation, product differentiation and market segmentation.