Tag: elasticity
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Price Elasticity
Usefulness of price elasticity The government can use price elasticity to decide on which product, tax can be levied. If government puts tax on a product with inelastic demand the revenue will increase as the consumer will be prepared to but the product as higher price (cigarettes)
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Price elasticity of demand
Price elasticity of demand It is a measure in economics to show the responsiveness of the quantity demanded of a good or service to a change in its price. PED = % change in quantity demanded % change in price