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Complete the following sentence: Price Elasticity of Demand (PED) measures the percentage change in ______________ for a good caused by a percentage change in the ______________ of the good itself - Leaving Cert Economics - Question 8 - 2007

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Question 8

Complete-the-following-sentence:--Price-Elasticity-of-Demand-(PED)-measures-the-percentage-change-in--______________-for-a-good-caused-by-a-percentage-change-in-the--______________-of-the-good-itself-Leaving Cert Economics-Question 8-2007.png

Complete the following sentence: Price Elasticity of Demand (PED) measures the percentage change in ______________ for a good caused by a percentage change in the ... show full transcript

Worked Solution & Example Answer:Complete the following sentence: Price Elasticity of Demand (PED) measures the percentage change in ______________ for a good caused by a percentage change in the ______________ of the good itself - Leaving Cert Economics - Question 8 - 2007

Step 1

Complete the following sentence:

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Answer

Price Elasticity of Demand (PED) measures the percentage change in quantity demanded for a good caused by a percentage change in the price of the good itself.

Step 2

'Price Elasticity of Demand for a normal good is negative'. Explain this statement.

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Answer

This statement means that as price increases, demand for the good will decrease. This inverse relationship is a characteristic of normal goods, indicating that higher prices lead to lower quantities demanded.

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