The value of Price Elasticity of Demand (PED) is always negative, i.e. price and demand have an inverse relationship. This is because the ratio of changes of the two variables is inoppositedirections, so if the price goes up, demand goes down and the change will end up negative. We ca...
AsthedemandcurveisdownwardslopingPEDwill haveanegativevalue.Theformulais:PED=%∆inQD%∆inP Priceelasticityofdemand(PED)8Pictures5SecondsHowmanycanyouremember?Finish Priceelasticityofdemand(PED)Let’slookatafewnumericalexamplesontheboard.1.Thepriceofcheesegoesup10%andthequantity...