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    Assessment 1a

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    Price elasticity of demand measures how sensitive the quantity demanded of a good is to changes in its price. Demand for necessities with few substitutes tends to be inelastic, meaning quantity demanded responds less to price changes, while demand for luxury goods with many substitutes tends to be elastic, meaning quantity demanded responds more to price changes. Producers use price elasticity of demand to understand how their profits will change when altering prices.

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    Assessment 1a

    Uploaded by

    api-315995277
    19 views1 page
    Price elasticity of demand measures how sensitive the quantity demanded of a good is to changes in its price. Demand for necessities with few substitutes tends to be inelastic, meaning quantity demanded responds less to price changes, while demand for luxury goods with many substitutes tends to be elastic, meaning quantity demanded responds more to price changes. Producers use price elasticity of demand to understand how their profits will change when altering prices.

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    Price elasticity of demand measures how sensitive the quantity demanded of a good is to changes in its price. Demand for necessities with few substitutes tends to be inelastic, meaning quantity demanded responds less to price changes, while demand for luxury goods with many substitutes tends to be elastic, meaning quantity demanded responds more to price changes. Producers use price elasticity of demand to understand how their profits will change when altering prices.

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    19 views1 page

    Assessment 1a

    Uploaded by

    api-315995277
    Price elasticity of demand measures how sensitive the quantity demanded of a good is to changes in its price. Demand for necessities with few substitutes tends to be inelastic, meaning quantity demanded responds less to price changes, while demand for luxury goods with many substitutes tends to be elastic, meaning quantity demanded responds more to price changes. Producers use price elasticity of demand to understand how their profits will change when altering prices.

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    of 1

    LOWER SIX ECONOMICS

    Price Elasticity of Demand

    Use the following words to complete the paragraph below


    greater
    less
    :

    producers
    sensitivity

    inelastic
    price

    elastic
    demanded

    Price elasticity of demand can be defined as the ___________ of quantity __________ to


    changes in the ____________ of a product. If a good has few substitutes and is a necessity, the
    price elasticity of demand will be ____________. However, luxury goods with many substitutes
    have an _____________ demand. When the absolute value of the Price Elasticity of Demand is
    __________ than one, demand is elastic and when it is _________ than one demand is inelastic.
    Price Elasticity of Demand is most useful to ___________ who want to know how their profits
    will change, when price changes.

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