Unit One: this is seriously never ending...

(1/14/15)

Price elasticity of demand: tells how drastically buyers will cut back/increase their demand for a good when their price rises/falls.

- 3 types of price elasticity of demands...
1)  Elastic demand --> when a demand changes greatly due to a change in price. (wants)
     EX: Substitutes like steak to chicken.

E is greater than One. [E > 1]

2) Inelastic demand --> demand will not change for a product even if the price changes. (needs)
     EX: milk, gas, and salt.

E is less than one. [E < 1]

3) Unit Elastic -->

E is equal to one. [E = 1]

Equations... 

Step 1.  %△ in quantity:

New Quantity - Old Quantity 

Old Quantity

Step 2. %△ in price:

New Price - Old Price 

Old Price

Step 3. Price Elasticity of Demand (PED):

%△ in Quantity

%△ in Price

*Price multiplied by Quantity gives you revenue.