Price Elasticity of Demand

 Price elasticity of demand (PED) is a measure of the responsiveness of the quantity demanded of a product to a change in its price. It is expressed as the percentage change in quantity demanded divided by the percentage change in price. Mathematically, it can be expressed as:

PED = (% Change in Quantity Demanded) / (% Change in Price)

The value of PED can be either elastic, inelastic, or unitary elastic. If PED is greater than one, it is said to be elastic, meaning that a small change in price results in a large change in quantity demanded. If PED is less than one, it is said to be inelastic, meaning that a large change in price results in a small change in quantity demanded. If PED is equal to one, it is said to be unitary elastic, meaning that the percentage change in quantity demanded is equal to the percentage change in price.

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