ECONOMICS
ELASTICITY OF DEMAND
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Change in price / change in quantity
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Change in quantity / change in price
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Percentage change in quantity / percentage change in price
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Percentage change in price / percentage change in quantity
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Detailed explanation-1: -Price elasticity measures the responsiveness of the quantity demanded or supplied of a good to a change in its price. It is computed as the percentage change in quantity demanded-or supplied-divided by the percentage change in price.
Detailed explanation-2: -Percentage change in P = (P1-P2) / [1/2 (P1 + P2)] where P1 = initial Price, and P2 = New Price.
Detailed explanation-3: -Calculate percent change by subtracting the original price from the new price, divide that number by the original price, and then multiply by 100.
Detailed explanation-4: -To calculate PED, we use the following formula: PED = percentage change in quantity demanded/percentage change in price.
Detailed explanation-5: -Price elasticity is the ratio between the percentage change in the quantity demanded (Qd) or supplied (Qs) and the corresponding percent change in price. The price elasticity of demand is the percentage change in the quantity demanded of a good or service divided by the percentage change in the price.