elasticity

Examples of Elasticity

Examples of Elasticity

Price elasticity of demand measures the responsiveness of demand to a change in price. see: Price elasticity of demand Price inelastic – a change in price causes a smaller % change in demand. Price elastic – a change in price causes a  bigger % change in demand. Examples of price inelastic demand We say a good is price inelastic, when an increase in price causes a smaller % fall in demand, e.g. if price of petrol falls 30%, but demand for petrol…

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Price Elasticity of Demand – Short and Long Run

Readers Question: the Elasticity of demand for good is likely to be greater in the short run than in the long run true or false? Elasticity of demand measures the responsiveness of demand to a change in price. See: Price Elasticity Demand  Demand is price inelastic if a change in price causes a smaller % change in demand. This gives a low PED <1. Demand is price elastic if a change in price causes a bigger % change in demand. This gives a high PED >1 Elasticity of Demand in Short Run In…