Price Elasticity of Demand (PED)
Measure of how sensitive quantity demanded is to price changes.
Formula
PED = % change in quantity demanded ÷ % change in price
Real World
When Ryanair raises fares by 10% on popular holiday routes, passenger numbers drop sharply — sometimes by 20% or more — showing highly elastic demand where price-sensitive travellers switch to alternatives.
Exam Focus
Always show your PED calculation and state whether demand is elastic or inelastic to secure method marks.
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