ELASTICITY OF DEMAND

• What is price elasticity of demand (PED)?


  Measure the responsiveness of quantity demanded to a change in the price of a product.
• What is the formula for PED?


  PED= percentage change in quantity demanded

  percentage change in price
• What is elasticity?


  Measures the responsiveness of buyers and sellers to changes in market conditions.
• What are factors that influence elasticity?

  • Substitutes
  • Habitual behaviour
  • Brand loyalty
  • Necessities
  • Small change in price (as a proportion of their income)