Elastic Demand
A situation where the percentage change in quantity demanded is greater than the percentage change in price (PED > 1 in ...
Formula
PED = % change in quantity demanded ÷ % change in price
Real World
When Ryanair raises fares by 10%, passengers often switch to rival airlines or delay travel, causing bookings to fall by more than 10% — classic elastic demand in a price-sensitive market.
Exam Focus
Always state the revenue implication: elastic demand means a price rise reduces total revenue — examiners expect this chain of reasoning.
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