PRICE ELASTICITY OF DEMAND

Elastic Demand- demand that is very sensitive to a change in price. product is not a necessity and there are available substitutes
Ex: steak, pork
E>1

Inelastic Demand: demand that is not sensitive to a change in demand.
the product is a necessity and there are few to no substitutes
Ex: Milk, insulin
E<1

Unit Elastic on Unitary Elastic Demand-
measure of how consumers react in a change in price.
E=1

PED FORMULAS:

Step 1 quantity  New-Old
                              Old

Step 2 price       New- old
                                old
Step 3:% ⃤ change in quantity
              %△ change in price