Elasticity

Question 1

What is elasticity of demand ?

Answer 1

How responsive demand is to a price change

Question 2

What is the equation for elasticity of demand ?

Answer 2

%change in demand / %change in price

Question 3

What does a value greater than one mean in PED ?

Answer 3

Change in demand is greater than the change in price ( elastic )

Question 4

What does the value = 1 mean in PED ?

Answer 4

Demand changes in line with price
( unit elastic )

Question 5

What does the value less than 1 mean in PED ?

Answer 5

Change in demand is less than price ( inelastic )