Module+14000+XIII+Further+Study

=XIII. Module 14000 Further Study CQ =

Price Elasticity of Demand
The Price Elasticity of Demand (commonly known as price elasticity) measures the rate of response of quantity demanded due to a price change. The formula for the Price Elasticity of Demand is: E // D // = (% Change in Quantity Demanded)/(% Change in Price)

A good economist is not only interested in calculating numbers. Further explanation lies under the numbers; in the case of price elasticity of demand it is used to see how sensitive the demand for a good is to a price change. The higher the price elasticity, the more sensitive consumers are to price changes. A very high price elasticity suggests that when the price of a good goes up, consumers will buy a great deal less of it and when the price of that good goes down, consumers will buy a great deal more. A very low price elasticity implies just the opposite, that changes in price have little influence on demand.

· If E // D // > 1, then Demand is Price Elastic (Demand is sensitive to price changes) · If E // D // = 1, then Demand is Unit Elastic · If E // D // < 1, then Demand is Price Inelastic (Demand is not sensitive to price changes)

The Product Life Cycle
Video: http://www.youtube.com/watch?v=-pygu7vyRm4