PED and YED

PED and YED

1. Minority goods such as petrol are PRICE INELASTIC, this is because the demand won't increase/ decrease because everyone will always need it to drive.

2. Most goods are PRICE ELASTIC as they are more responsive to changes in price.

3. PED = Percentage change in quantity demanded/ Percentage change in price

   • Percentage change = Difference/ original x100
   • 0 = Perfectly inelastic
   • More than 1 = Inelastic
   • 1 = Unit elastic
   • Less than 1 = elastic

4. Factors influencing PED: Time, Competition for the same product, Branding, The proportion of income spent on a product, Product types vs. The product of an individual

5. Income elasticity of demand measures the responsiveness of demand to a change in income.

6. Inferior goods/ necessities - as income increases, demand decreases

   • Normal goods/ Luxuries - As income decreases, demand increases