Price Elasticity of Demand

Analyze price elasticity of demand (PED) measuring how quantity demanded responds to price changes using the formula %ΔQd / %ΔP. Classify demand as elastic (|PED| > 1, price changes significantly affect quantity), inelastic (|PED| < 1, quantity relatively unresponsive), or unit elastic (|PED| = 1). Understand how elasticity affects total revenue: price increases raise revenue for inelastic goods but lower revenue for elastic goods. Explore determinants including substitutes, necessity, and time horizon.

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