elasticity

• inelastic goods are those where changes to price have little effect on qty demanded (e.g petrol)
• price elasticity is calculated by % change in qty / % change in price
• elastic goods are those where changes to price have a large effect on qty demanded (e.g holidays)
• price elasticity of supply measures how much suppliers will increase output if there is an increase in price
• perfectly elastic means that producers can instantly respond to any change in price by increasing/decreasing production
• perfectly inelastic supply means no change in output with a change in price
• if pep = -1 then its perfectly elastic
• if pep = 0 then its unitary elastic
• if pep > 1 then its elastic
• perfectly elastic goods are those with an infinite price elasticity (qty demanded will be zero if price goes up at all)