what is price elasticity of demand???
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Price elasticity of demand is the responsiveness of the quantity demanded to a change in price.
- Price elasticity of demand = percentage change in the quantity demanded/percentage change in price
- = (change in quantity demanded/quantity demanded)/(change in price/price)
- It is always negative (mathematically) because there is inverse relationship between price and quantity but for convenience we ignore the sign.
- It can be greater that 1(elastic demand), equal to 1(unitary demand) or less than 1(inelastic demand).
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