PED Interpretation
Understanding what PED values mean for business: If PED = -0.5 (inelastic), 10% price rise → only 5% demand fall (revenu...
Formula
Revenue impact: TR = P × Q (assess direction after PED-driven Q change)
Real World
Apple raises iPhone prices year-on-year yet sales volumes hold up, suggesting inelastic demand (PED between 0 and -1), so total revenue increases with each price rise.
Exam Focus
When interpreting PED, always link the value to the revenue consequence — elastic demand means a price rise reduces total revenue.
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