Price Elasticity of Demand for this product is 1.5
Price Elasticity Demand for this product?
The price elasticity Demand for this product equals the percentage change in quantity demanded divided by the percentage change in price
What is density of elasticity of this product?
PED (price elasticity of demand) can be defined as an economic tool that studies the degree to which the QD (quantity demanded) of a commodity responds to alterations in the prices of that commodity.
Generally, it is calculated by placing the proportional alteration in the QD above the proportional alteration in the P (price). This implies that the general formula to calculate the PED is:
PED = % alteration in QD / % alteration in P
Difference Between Elastic and Inelastic?
Demand is elastic when the % alteration in QD is more than the % change in P (implying that PED is greater than 1) and demand is inelastic when the % alteration in QD is less than the % change in P (implying that the PED is less than 1).
Here, the % alteration in QD is given as 15% and the % alteration in P is given as 10%. Put the values in the formula above and solve for PED.
price of a product increased 10%
Quantity demanded decreases 15%
PED =15÷10
=1.5
Since the value of PED is greater 1, so it will be elastic
The Price Elasticity of Demand of this product is 1.5
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