The PED: Information Pack
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Introduction
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The objective of this simulation is to illustrate how to calculate and apply the price elasticity of demand.
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Background
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The price elasticity of demand is a very important economic concept that can be applied across a broad range of areas in economics and business studies. The price elasticity of demand measures how the demand for a good responds to a change in the price. It is calculated as the percentage change in quantity divided by the percentage change in price.
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The Model Settings
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You can download an Excel version of the original spreadsheet (Excel 97)
The simulation allows the individual to calculate a price elasticity of demand using their own quantity and price settings, and apply the consequences of a change in price on the original and new total revenues.
The model settings for the inputs are;
- Original Price (£): 50 to 150
- Original Quantity (£): 50 to 150
- Final Price (£): 50 to 150
- Final Quantity: 50 to 150
- Value of PED: -2.00 to 0
- Percentage change in price (%): -20.00 to 20.00
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Navigation
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