What is the elasticity of demand? How can you measure the elasticity of demand?
What is the elasticity of demand? How can you measure the elasticity of demand?
Price elasticity of demand (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price, ceteris paribus. ... Revenue is maximized when price is set so that the PED is exactly one.
Consumers generally respond to prices changes thus economists call this measurement the price elasticity of demand. To calculate the price elasticity of demand this simple formula is used: Elasticity = the percentage change in quantity demanded divided by the percentage change in price.