explain how the elasticity coefficient can be used to determine the degree of elasticity of demand
Answers
Question:
explain how the elasticity coefficient can be used to determine the degree of elasticity of demand..
Answer:
A PED coefficient equal to one indicates demand that is unit elastic; any change in price leads to an exactly proportional change in demand (i.e. a 1% reduction in demand would lead to a 1% reduction in price). A PED coefficient equal to zero indicates perfectly inelastic demand.
Explanation:
Economists usually refer to the coefficient of elasticity as the price elasticity of demand, a measure of how much the quantity demanded of a good responds to a change in the price of that good, computed as the percentage change in the quantity demanded divided by the percentage change in price.
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