Elasticity (Economics)
Sensitivity of quantity demanded/supplied to price changes.
Formula
Price Elasticity of Demand (PED) = % Change in Quantity Demanded / % Change in Price
Real World
When Netflix raised its UK subscription price by £1 in 2023, it lost relatively few subscribers — demonstrating price-inelastic demand because customers saw it as a necessity with few close substitutes.
Exam Focus
Always interpret the PED value: a figure between 0 and −1 is inelastic; beyond −1 is elastic — state what this means for revenue.
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