![]() ![]() ![]() Mathematically, we define price elasticity of demand as the percent change in quantity demanded over the percent change in price. Your homework tonight is to watch When Harry Met Sally Calculating Price Elasticity of Demand This guide will dive deep into price elasticity of demand, how to calculate it, and what it means for different consumers. We can say that Sally is much less price sensitive, or alternatively, that her demand for turkey sandwiches is less elastic (or more inelastic) than Harry's. Now let's suppose the deli increases the price from $10 to $15 per sandwich, and in response, Harry decreases from 5 sandwiches to 1 sandwich, whereas Sally decreases from 5 sandwiches to 4 sandwiches. Let's suppose that at a price of $10, both Harry and Sally demand a quantity of 5 sandwiches. For example, suppose we have two consumers, Harry and Sally, in the market for turkey sandwiches. ![]() The Price Elasticity of Demand (PED) is a measure of a consumer's sensitivity to price changes. However, a question that may arise is what does the demand curve tell us about a consumer? All we know right now is that consumers reduce their quantity demanded as price rises, but there's more to uncover. We've also discussed how it shifts with different external market factors. So far, we've discussed how the demand curve is constructed and why it is downward sloping. What is Price Elasticity of Demand (PED)? ![]()
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