This short revision video looks at eight factors that can influence the coefficient of price elasticity of demand (PED) for different products.

2. What is Price Elasticity of Demand?
• Price elasticity of demand (PED) measures the responsiveness of
demand after a change in the good’s own price
• The basic formula for calculating the co-efficient of price
elasticity of demand is:
– Percentage change in quantity demanded divided by the
percentage change in price
• All normal goods with downward sloping demand curves will
have a negative coefficient of price elasticity of demand
• Since changes in price and quantity usually move in opposite
directions, usually we do not bother to put in the minus sign
• We are more concerned with the co-efficient of elasticity
Elasticity is the responsiveness of X to a change in another variable

3. Availability of
substitutes
Cost of
switching
Breadth of
definition
Degree of
necessity
Time frame Brand loyalty Percentage of
income
Habit-forming
products
Factors Affecting the Price Elasticity of Demand

4. Availability of
substitutes
Cost of
switching
Breadth of
definition
Degree of
necessity
Time frame Brand loyalty Percentage of
income
Habit-forming
products
Factors Affecting the Price Elasticity of Demand