Price Elasticity of Demand

1. ​Define and Explain Price Elasticity of Demand

2. ​Calculate the price Elasticity of Demand

3. ​Illustrate by graphs, the degrees of Elasticity of Demand

​Generally, Elasticity is a measure of the responsiveness of something when something else changes. There are many different elasticities; here we’ll look at the price elasticity of demand.

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​A Measure of the responsiveness of consumers demand to a change in price. It tells by how much demand will change when price changes.

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​The price elasticity of demand measures how consumers respond to a price change.

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​​The price elasticity of demand is the percentage change in quantity demanded of a good divided by the percentage change in the price of that same good (and you must take the absolute value of the whole thing).

**ABSOLUTE VALUE REFERS TO THE VALUE OF THE NUMBER IGNORING THE SIGN.

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The first formula is for the price elasticity of demand and the second is to calculate the percentage change.

​The absolute value just means that you express the price elasticity of demand as a positive number .

HOWEVER, YOUR CALCULATIONS FOR PED WILL ALWAYS RESULT IN A NEGATIVE NUMBER, therefore you take the absolute value when interpreting the values.

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​Watch the video on the next slide "Introduction to Price Elasticity of Demand" or copy and paste

​link to you tube: https://www.youtube.com/watch?v=5UKw4blQdsc

​After watching the Video on the next slide, answer the questions to see how much you understand.