# Price Elasticity of Demand

**Topics:**Supply and demand, Price elasticity of demand, Elasticity

**Pages:**1 (373 words)

**Published:**November 25, 2012

The slope of a demand curve cannot indicate the PED because the slope and elasticity are two different concepts. Slope measures the steepness and flatness of the curve and give units of price and quantity at a point. On the other hand price elasticity of demand measures the responsiveness of quantity to the changes in price. In a demand curve, the slope decreases by a constant unit while In PED, elasticity is different at each point.

As shown in the picture above, PED changes at every point. At the change in quantity from 2.5 to 3, and change in price from 15 to 14, the PED is │2.64│ while at the change in quantity from 7 to 7.5,

and change in price from 6 to 5, the PED is │0.38│. On the other hand, while seeing the slope of the line, it is changing by 2 units throughout. This shows that while the slope remains constant, the elasticity keeps varying on the curve. This is also one of the reasons that elasticity is relatively more elastic on the upper portion of the demand curve compared to the lower portion of the curve which gradually gets perfectly inelastic when the demand curve intersects the horizontal axis. Thus, the frequent change in elasticity at every point and the slope being constant...

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