AP Microeconomics: Price Elasticity of Demand Quiz

Elasticity measures how responsive consumers are to a change in price. If consumers are very responsive, the price elasticity of demand, PED, will be greater than 1. Since the demand curve is usually negatively sloped, the PED can vary along the curve. Because PED can vary along the curve, the College Board uses the midpoint method for calculating the coefficient. The recommended formula is: