# P.E.D

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P.E.D

## 3. Formula

### 3.1. Percentage change in queantities demanded / Percentage change in price

3.1.1. Percentage change = ((FV - IV) / IV) x 100

3.1.2. PED < 1 : INELASTIC

3.1.2.1. The demand curve will be quite steep

3.1.3. PED > 1 : ELASTIC

3.1.3.1. The demand curve will be quite horizontal

3.1.4. PED = 1 : UNIT ELASTIC

3.1.4.1. The demand will be a curve, literally

3.1.5. PED = 0 : PERFECLTY INELASTIC

3.1.5.1. Vertical Demand curve

3.1.6. PED = INFINITY : PERFECTLY ELASTIC

3.1.6.1. Horizontal demand curve

## 4. Determinants of price elasticity of demand

### 4.1. Number of substitutes

4.1.1. The more substitutes a product has, the more elastic it will be

### 4.2. Closeness of substitutes

4.2.1. The closer that a product has a similar one, the more elastic it will be.

### 4.3. Necessities vs Luxuries

4.3.1. Luxuries will be more elastic than necessities

### 4.4. Length of time

4.4.1. The longer you wait for a purchase the more elastic the product will be

### 4.5. Proportion of income spent

4.5.1. A product that occupies the least amount of your income will be the more inelastic