Study notes
# Price Elasticity of Demand

**Price elasticity of demand **measures the **responsiveness of demand** after __a change in price__

The formula for calculating the co-efficient of elasticity of demand is:

*Percentage change in quantity demanded divided by the percentage change in price*

How much does quantity demanded change when price changes? By a lot or by a little? Elasticity can help us understand this question

**Values for price elasticity of demand**

**If Ped = 0**demand is**perfectly inelastic**- demand does not change at all when the price changes – the demand curve will be vertical.**If Ped is between 0 and 1**(i.e. the % change in demand from A to B is smaller than the percentage change in price), then**demand is inelastic**.**If Ped = 1**(i.e. the % change in demand is exactly the same as the % change in price), then demand is**unit elastic**. A 15% rise in price would lead to a 15% contraction in demand leaving total spending the same at each price level.**If Ped > 1**, then demand responds more than proportionately to a change in price i.e.**demand is elastic**. For example if a 10% increase in the price of a good leads to a 30% drop in demand. The price elasticity of demand for this price change is –3

Featured

Resources, approaches and support for teachers delivering the new AQA specification in A Level Economics (including the Year 1 AS teaching content)

Revision videos
### Price Elasticity of Supply

Study notes
### Monopoly - 3rd Degree Price Discrimination

Study presentations
### How Markets Work - Cross Price Elasticity of Demand

Study presentations
### How Markets Work - Income Elasticity of Demand

Study presentations
### How Markets Work - Price Elasticity of Demand

Study notes
### Price elasticity of supply

Study notes
### Price Elasticity of Demand and Total Revenue

Study notes
### Factors Affecting Price Elasticity of Demand

Study notes
### Consumer Surplus

Revision quizzes
### Income & Cross Elasticity - Revision Quiz (1)

Exemplar A Grade answers to the AQA ECON1 and ECON2 exam papers in summer 2014

£5.00

This resource comprises two practice exam papers (with supporting mark schemes) for each of the two Year 1 (AS) papers. The format of each practice exam paper follows precisely the format of the specimen assessment materials issued by the board that have been accredited by Ofqual.

£75.00

Study presentations
### Behavioural Nudges in Action

Study presentations
### Revision Presentation - Monopolistic Competition

Study notes
### Digital Conglomerates - What does Google Do?

Study presentations
### Revision Presentation on Royal Mail Privatisation

Revision videos
### A2 Macro Exam Skills – Globalisation Question

Revision videos
### Competition Policy Case Study - Royal Mail Privatisation