2.5.2—Price elasticity of demand

$PED=(\%\Delta Q_d)/(\%\Delta P)$. It is normally negative because price and quantity demanded move oppositely; many decisions use the absolute magnitude while retaining the sign when asked.

Calculate each percentage change using the base specified by the data or examination convention, divide, and classify: $|PED|<1$ inelastic, $=1$ unit elastic, and $>1$ elastic. The theoretical magnitude ranges from zero to infinity.

Example

If price rises from $10 to$11, the percentage price change is $10\%$. If quantity demanded falls from 200 to 170, the percentage quantity change is $-15\%$. Thus $PED=-15\%/10\%=-1.5$, so demand is elastic.

State the sign convention and calculation base. Midpoint reasoning appears only in local HL evidence and is not inserted into this shared SL/HL card unless the question explicitly supplies that convention.

PED is measured over a stated price interval and market definition; it can change at another point on the same curve.