Price Elasticity of Demand (PED)

Understanding Elasticity

PED measures how sensitive consumers are to a price change. Formula: % Change in QD / % Change in Price.

• Elastic (>1): Consumers are sensitive (e.g., Luxury cars). A small price hike drops sales significantly.
• Inelastic (<1): Consumers don't care much (e.g., Insulin, Petrol). You buy it regardless of price.

Use our AI Quiz Generator to test your math on calculating PED coefficients.