Elasticities

Measures of elasticity measure how responsive one thing is to a change in another. For example, PED, which measures how Demand varies with price.

Elastic

If an elasticity is elastic, it has a magnitude of greater than 1. For example, 1.5, 2, 3, -3, -6, etc.

This means that it is very responsive to the change.

For example, for PED, a PED value of -2 would mean that consumers are very sensitive to a change in price.

Inelastic

If an elasticity is inelastic, it has a magnitude of less than 1. For example, 0.2, 0.4, -0.3 etc.

This means that it is not very responsive to the change.

For example, for PED, a PED value of -0.2 would mean that consumers are not sensitive to a change in price.