Calculate the price elasticity of demand to understand how a change in price affects the quantity of a product demanded by consumers.
Initial State
New State
Result
Price Elasticity of Demand (PED)
Demand Type
Understanding the Result
Elastic (PED > 1): A price increase leads to a proportionally larger decrease in demand. Consumers are sensitive to price changes.
Inelastic (PED < 1): A price increase leads to a proportionally smaller decrease in demand. Consumers are not very sensitive to price changes (e.g., gasoline, medicine).
Unit Elastic (PED = 1): A price increase leads to a proportionally equal decrease in demand.