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Determinants of the Price Elasticity of Demand (PED).
Title: Determinants of the Price Elasticity of Demand (PED).
Category: Business & Economy
Details: Words: 254 | Pages: 1.1 (approximately 235 words/page)
Determinants of the Price Elasticity of Demand (PED).
The price elasticity of demand measures how responsive the quantity demanded of a good is to a change in its price. The value illustrates if the good is relatively elastic (PED is greater than 1) or relatively inelastic (PED is less than 1).A good's PED is determined by numerous factors, these include;·Number of substitutes: the larger the number of close substitutes for the good then the easier the household can shift to alternative goods if …showed first 75 words of 254 total…
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…showed last 75 words of 254 total…in the price of inexpensive goods. The following example illustrates how to determine the price elasticity of demand for a good.The price elasticity of demand for supermarket own produced strawberry jam is likely to be elastic. This is because there are a very large number of close substitutes (both in jams and other preserves), and the good is not a necessity item. Therefore, consumers can and will easily respond to a change in price.
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