Elastic demand is when the percent change in demand is greater than the percent change in price.
Inelastic demand is when the percent change in demand is less than the percent change in price.
What is elasticity?
The percent change in price over the percent change in quantity
The responsiveness of one variable to changes in another
When demand falls and price increases
Elasticity does not measure the extent to which demand will change.
The general population is NOT sensitive to changes in air ticket prices.
PED makes an inverse relationship between price and demand (if one rises the other falls)
If one gets a PED between 0 and -1, the relationship is elastic
When PED=0, demand is perfectly inelastic.
An elastic demand curve is more vertical in a graph.
Businesses will stop buying air tickets if their prices increase.
