ECO 1013 Student

ECO 1013 Student

Tuesday, 17 March 2015

CHAPTER 2 : Pricing Theories

 

Price Elasticity of Demand (PED) is the responsiveness of quantity demanded to a change in price . It is the percentage change of quantity demanded in response to a one percent change in price. Demand is said to be inelastic where PED is less than one, whereas it is said to be elastic where PED is greater than one.

  • (((Original Price - New Price) / Original Price) * 100) = % Change in Price
  • (((Original Quantity Demanded - New Quantity Demanded) / Original Quantity Demanded) *100) = % Change in Quantity Demanded
  • % Change in Quantity Demanded / % Change in Price = PED
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