Chapter 4

• elasticity: a measure of how much one economic variable - such as the quantity demanded of a product - responds to changes in another economic variable - such as the product’s price
• Elastic demand:

  PED > 1 (ignore negative)
• Inelastic demand:

  PED < 1 (ignore negative)
• Perfectly inelastic:

  No change in quantity demand (Qd) when price change
• Perfectly elastic demand:

  PED = ♾
• Unit elastic:

  when % price change and % quantity change is the same.

  PED = 1 (ignore negative)