elasticity

Price Elasticity of Demand – Short and Long Run

Price Elasticity of Demand – Short and Long Run

Demand tends to be more price inelastic in the short-run as consumers don’t have time to find alternatives. In the long-run, consumers become more aware of alternatives. Price elasticity of demand measures the responsiveness of demand to a change in price.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…

Examples of elasticity

Examples of elasticity

Price elasticity of demand measures the responsiveness of demand to a change in price. See: Price elasticity of demandPrice 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 demandWe 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…