Price Elasticity on Demand

Price Elasticity on Demand

1. Percentage change in quantity demand

   • Percentage change in price

2. PED: Measures the sensitivity of demand to a change in price

3. Factors Influencing PED

   • Time
   • Proportion of income spent on a product
   • Availability of similar products
   • Type of product
   • Demand for a brand versus demand for a product

4. By calculating the PED, a firm can identify how changes in price may affect the quantity of its sales and therefore revenue

5. Total Revenue: is the income generated from the sales. It is also called turnover/sales.

6. A price inelastic demand: means that the impact of a change in price leads to a smaller change in the quantity demanded (in %)