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1.2.3 Price Elasticity of Demand - Coggle Diagram
1.2.3 Price Elasticity of Demand
definition
the responsiveness of demand to a change in price
formula
% change in demand = % change in quantity demanded / % change in price
% change = difference / original X100
elasticity
price inelastic
perfectly elastic
price elastic
price unitary elastic
inelasticity
price inelastic
perfectly inelastic
factors that influence PED
LUXURY/NECESSITY
luxury = price elastic
necessity = price inelastic
ADDICTING/HABIT FORMING
price inelastic: price rises - demand does not fall much
PERCENTAGE OF INCOME
greater/smaller the % change of income a price change takes the more price elastic/inelastic demand will be
TIME PERIOD
short-run = inelastic ,, long-run = elastic
SUBSTITUTES NO.
more substitutes there are, the more price elastic
less substitutes there are, the more price inelastic