Price Elasticity of Demand

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Issue:

Business

 

Written by:

Kara B

 

Date added:

December 25, 2015

 

Level:

University

 

Grade:

A

 

No of pages / words:

5 / 1382

 

Was viewed:

429 times

 

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Essay content:

Price elasticity of demand measures the responsiveness of a change in quantity demanded for a good or service to a change in price. Mathematically, the PED is the ratio of the relative (or percent) change in quantity demanded to the relative change in price. For most goods this ratio is negative, but in practice the elasticity is represented as a positive number and the minus sign is understood...
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For most goods this ratio is negative, but in practice the elasticity is represented as a positive number and the minus sign is understood. For example, if for some good when the price decreases by 10%, the quantity demanded increases by 20%, the PED for that good will be two. When the Price Elasticity of Demand of a good is greater than one in absolute value, the demand is said to be elastic; it is highly responsive to changes in price...
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