PED

• The basic law of demand states that when the price goes up, quantity demanded will decrease.
• Price elasticity of demand measures the responsiveness of quantity demanded given a change in price.
• The equation for price elasticity of demand is PV equals the percentage change in quantity demanded over the percentage change in price.
• Price elasticity of demand is always negative because of the law of demand.
• If price goes up, positive quantity demand will fall and a negative number is obtained.
• If price goes down, negative quantity demand will increase and a positive number is obtained.
• Price elasticity of demand is greater than 1 when a greater proportionate change in quantity demanded occurs for any given price change.
• Price elasticity of demand is less than 1 when a smaller proportionate change in quantity demanded occurs for any given price change.
• If price elasticity of demand is zero, quantity demanded won't change regardless of the price change.
• If price elasticity of demand is infinity, quantity demanded is perfectly price elastic.
• Demand for sofas is price elastic, meaning as the price of sofas goes down, the quantity demanded increases proportionally more than the decrease in price.
• The quantity demanded of sofas increases from 2000 to 3800, resulting in a change of 90%.
• The steepness of the demand curve indicates how proportionate the change in quantity demanded will be for any change in price.
• Luxuries tend to have more price inelastic demand, while necessities have more price elastic demand.
• The number of substitutes available affects the elasticity of demand, with more substitutes leading to more price inelastic demand.
• A 20% decrease in price leads to an increase in quantity demanded, represented by the equation: (2000/2000) * 100 = 20% decrease.
• In the short run, demand is price inelastic because there are a few substitutes available, but in the long run, demand is much more price elastic as more substitutes become available.
• If a good is addictive, a price increase will cause a decrease in quantity demanded, but maybe not by very much, indicating price inelastic demand.
• If demand is price inelastic, the change in quantity demanded will be proportionately less no matter what the price goes up or down.
• The percentage of income that a price change takes affects the elasticity of demand, with a greater percentage leading to more price elastic demand.