Elasticity Explained: Do You Raise or Lower Your Prices?

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Master Price Elasticity of Demand to understand how price changes affect consumer behavior. Learn to calculate PED for better business revenue outcomes.

This guide explains the core concepts of Price Elasticity of Demand for economics students and business owners. You will learn the mathematical difference between elastic and inelastic demand, specifically identifying how a PED value above or below one changes your firm's strategy.

By applying Price Elasticity of Demand principles, you can predict how pricing shifts impact total revenue. This video breaks down the relationship between price sensitivity and profit, providing a clear framework for making data-driven pricing decisions based on the PED coefficient.

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⏰ Timestamps:
0:00 Introduction
0:10 What is PED? Definition & Formula
0:39 Why PED Has a Negative Sign
0:54 Elastic vs Inelastic Demand Explained
1:27 Total Revenue Formula
1:31 Cambridge Exam Question (6 Marks)
1:39 Inelastic Demand & Pricing Strategy
1:57 Elastic Demand & Pricing Strategy
2:13 Unitary Elasticity Explained
2:30 Numerical Illustration
2:53 Resources & Outro

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