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| Price Elasticity of Demand |
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| (PED) |
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| n | The formula
for price elasticity of demand |
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| (PED) is %
change in quantity demanded/ % |
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| change in price of the
good |
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| n | If the price of dentistry rose by 10% and
the |
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| quantity
bought fell by 5% then the PED |
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| would be
–5%/+10% = –0.5. This tells us that |
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| demand for
dentistry is not particularly |
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| sensitive to
changes in price. It is what |
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| economists
call price inelastic. |
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