- What is the Elasticity ?
Elasticity = A measure of responsiveness. ( MEASURE means measure how much of something changes when there is a change in/ of the factors that determine it.)
- Elasticity of Demand = PED ( Price Elasticity Demand)
Measure how much the quantity demand changes when the P of product.
The equation for it PED = %ΔQd / %ΔP
when PED = 0 it is perfectly inelastic
- Inelastic Deman : PED greater than 0,
PED smaller than 1.
A change in the P leads to a proportionally smaller cange in the Qd. ( totally revenue gained by a firm will increase)
Inelastic D + better Revenue = Raise the P
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