Price Elasticity of Demand (Grade 11 NSC Matric Economics): Flashcards

How responsive consumers are when price changes

As price rises, quantity demanded falls (and vice versa)

To compare responsiveness across different products/markets

$E_d = \frac{\% \text{ change in Qd}}{\% \text{ change in P}}$

% change in Qd > % change in price (elasticity > 1)

% change in Qd < % change in price (elasticity < 1)

Makes demand highly elastic (easy to switch)

Inelastic demand (e.g., salt)

Longer adjustment time = more elastic demand

Inelastic demand (hard to substitute)