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The Formula:
             % Change in quantity demanded
Pde =        __________________________
           % Change in Price of the commodity

If answer is between 0 If the answer is
and -1: the relationship between -1 and infinity:
is inelastic             the relationship is
                         elastic
Note: PED has (–) sign in front of it because as price
rises.. demand falls and vice-versa
 (inverse relationship between price and demand)
Slope is normally described by    Elasticity is the measurement
  the ratio of the "rise" divided   of how changing one economic
  by the "run" between two          variable affects others. it is the
  points on a line.                 ratio of the percentage change in
                                    one variable to the percentage
                                    change in another variable.

                  Q                                %      Q
                                                  _____________
Slope =     ____________    Price Elasticity =
                  P                                %       P
1. Perfectly Elastic Product    (Ped = ∞)
2. Perfect Inelastic Product    (Ped = 0)
3. Elastic Product             (1 < Ped< ∞)
4.Inelastic Product            (0 < Ped< 1)
5. Unitary Elastic Product      (Ped = 1)
Perfectly Elastic Demand

A perfectly elastic
demand is one whos
demand curve is a
perfectly horizontal
line. This means that
at the same price for
the item, the consumer
is willing to buy more
and more even at that
same price.
Perfectly Inelastic Demand
When a price change
has no effect on the
supply and demand of a
good or service, it is
considered perfectly
inelastic. An example of
perfectly inelastic demand
would be a life saving
drug that people will pay
any price to obtain. Even
if the price of the drug
were to increase
dramatically, the quantity
demanded would remain
the same.
Elastic Demand
Elastic demand means that
demand for a product is
sensitive to price changes.
For example, if the selling
price of a product is
increased, there will be
fewer units sold. If the
selling price of a product
decreases, there will be an
increase in the number of
units sold. Elastic demand
is also referred to as the
price elasticity of demand.
Inelastic Demand
A situation in which
the demand for a product does
not increase or decrease
correspondingly with a fall or
rise in its price. From
the supplier's viewpoint, this is
a highly desirable situation
because price and total
revenue are directly related; an
increase in price increases total
revenue despite a fall in
the quantity demanded.
Unitary Demand

A unitary elastic
product is one in which
for a certain amount of
change in price, there is
the same amount of
change in sales. Hence, if
I raise the price of a
product by 5%, then the
recorded fall in sales will
be exactly 5% and vice
versa.
Price elasticity of demand (economics)

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Price elasticity of demand (economics)

  • 1.
  • 2.
  • 3. The Formula: % Change in quantity demanded Pde = __________________________ % Change in Price of the commodity If answer is between 0 If the answer is and -1: the relationship between -1 and infinity: is inelastic the relationship is elastic Note: PED has (–) sign in front of it because as price rises.. demand falls and vice-versa (inverse relationship between price and demand)
  • 4. Slope is normally described by Elasticity is the measurement the ratio of the "rise" divided of how changing one economic by the "run" between two variable affects others. it is the points on a line. ratio of the percentage change in one variable to the percentage change in another variable. Q % Q _____________ Slope = ____________ Price Elasticity = P % P
  • 5.
  • 6. 1. Perfectly Elastic Product (Ped = ∞) 2. Perfect Inelastic Product (Ped = 0) 3. Elastic Product (1 < Ped< ∞) 4.Inelastic Product (0 < Ped< 1) 5. Unitary Elastic Product (Ped = 1)
  • 7. Perfectly Elastic Demand A perfectly elastic demand is one whos demand curve is a perfectly horizontal line. This means that at the same price for the item, the consumer is willing to buy more and more even at that same price.
  • 8. Perfectly Inelastic Demand When a price change has no effect on the supply and demand of a good or service, it is considered perfectly inelastic. An example of perfectly inelastic demand would be a life saving drug that people will pay any price to obtain. Even if the price of the drug were to increase dramatically, the quantity demanded would remain the same.
  • 9. Elastic Demand Elastic demand means that demand for a product is sensitive to price changes. For example, if the selling price of a product is increased, there will be fewer units sold. If the selling price of a product decreases, there will be an increase in the number of units sold. Elastic demand is also referred to as the price elasticity of demand.
  • 10. Inelastic Demand A situation in which the demand for a product does not increase or decrease correspondingly with a fall or rise in its price. From the supplier's viewpoint, this is a highly desirable situation because price and total revenue are directly related; an increase in price increases total revenue despite a fall in the quantity demanded.
  • 11. Unitary Demand A unitary elastic product is one in which for a certain amount of change in price, there is the same amount of change in sales. Hence, if I raise the price of a product by 5%, then the recorded fall in sales will be exactly 5% and vice versa.