PED

• What will happen when there is an increase in price and a fall in price

  Increase in price - will be a fall in quantity demanded

  Fall in price - increase in quantity demanded
• What does PED help us calculate

  how responsive the change in quantity demanded will be to a change in price
• Is the PED value always positive or Negative

  Negative
• How is PED calculated

  %change in quantity demanded / % change in price
• How do you calculate a % change

  New value - old /old value X 100
• If the PED > 1 what does that mean

  The type of good is elastic - demand is more responsive to a change in price

  Would be luxury products such as cars
• If the PED Value is between 0 and 1 what does that mean

  Type of good is inelastic - demand is less responsive to a change in price

  Necessities such as bread