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 budget airline Ryanair cuts fares by 10%, passenger bookings typically rise by more than 10% — holidays are discretionary and price-sensitive, making demand elastic.
Exam Focus
When price rises and demand is elastic, total revenue *falls* — state the revenue effect explicitly, as many students forget this step.
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